LL WACC - Weighted Average Cost of Capital
The WACC of Lumber Liquidators Holdings Inc (LL) is 6.3%.
| Range | Selected | |
| Cost of equity | 10034.5% - 18374.3% | 14204.4% |
| Tax rate | 16.6% - 19.0% | 17.8% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.7% - 6.8% | 6.3% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 2180.57 | 3280.26 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10034.5% | 18374.3% |
| Tax rate | 16.6% | 19.0% |
| Debt/Equity ratio | 6600 | 6600 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.7% | 6.8% |
| Selected WACC | 6.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| LL | Lumber Liquidators Holdings Inc | 6600 | 1.18 | 0 |
| BGFV | Big 5 Sporting Goods Corp | 0.8 | 1.73 | 1.04 |
| BOOT | Boot Barn Holdings Inc | 0 | 1.71 | 1.71 |
| FND | Floor & Decor Holdings Inc | 0.02 | 1.13 | 1.11 |
| HD | Home Depot Inc | 0.15 | 0.7 | 0.63 |
| HIBB | Hibbett Sports Inc | 0.05 | 1.91 | 1.84 |
| HZO | MarineMax Inc | 1.9 | 2.06 | 0.81 |
| LOW | Lowe's Companies Inc | 0.28 | 0.68 | 0.55 |
| ONEW | OneWater Marine Inc | 3.47 | 1.67 | 0.43 |
| CLAS B.ST | Clas Ohlson AB | 0.09 | 0.57 | 0.53 |
| Low | High | |
| Unlevered beta | 0.6 | 0.9 |
| Relevered beta | 3254.09 | 4895.42 |
| Adjusted relevered beta | 2180.57 | 3280.26 |
LL's CAPM model and how its cost of Equity is calculated
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 LL:
cost_of_equity (14,204.40%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (2180.57) + 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.