LOCO
El Pollo Loco Holdings Inc
Price:  
9.08 
USD
Volume:  
564,109.00
United States | Hotels, Restaurants & Leisure
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LOCO WACC - Weighted Average Cost of Capital

The WACC of El Pollo Loco Holdings Inc (LOCO) is 7.9%.

The Cost of Equity of El Pollo Loco Holdings Inc (LOCO) is 9.15%.
The Cost of Debt of El Pollo Loco Holdings Inc (LOCO) is 4.85%.

Range Selected
Cost of equity 7.60% - 10.70% 9.15%
Tax rate 26.50% - 26.90% 26.70%
Cost of debt 4.80% - 4.90% 4.85%
WACC 6.7% - 9.2% 7.9%
WACC

LOCO WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.8 1.04
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.60% 10.70%
Tax rate 26.50% 26.90%
Debt/Equity ratio 0.27 0.27
Cost of debt 4.80% 4.90%
After-tax WACC 6.7% 9.2%
Selected WACC 7.9%

LOCO'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 LOCO:

cost_of_equity (9.15%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.8) + 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.