The WACC of Leslie's Inc (LESL) is 14.4%.
| Range | Selected | |
| Cost of equity | 39.70% - 54.40% | 47.05% |
| Tax rate | 23.10% - 24.50% | 23.80% |
| Cost of debt | 9.60% - 23.90% | 16.75% |
| WACC | 9.0% - 19.8% | 14.4% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 7.8 | 8.84 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 39.70% | 54.40% |
| Tax rate | 23.10% | 24.50% |
| Debt/Equity ratio | 19.41 | 19.41 |
| Cost of debt | 9.60% | 23.90% |
| After-tax WACC | 9.0% | 19.8% |
| Selected WACC | 14.4% | |
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for LESL:
cost_of_equity (47.05%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (7.8) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.