The WACC of Lifeway Foods Inc (LWAY) is 4.9%.
Range | Selected | |
Cost of equity | 5.7% - 8.2% | 6.95% |
Tax rate | 36.7% - 37.5% | 37.1% |
Cost of debt | 4.3% - 4.5% | 4.4% |
WACC | 4.2% - 5.5% | 4.9% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 0.4 | 0.59 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 5.7% | 8.2% |
Tax rate | 36.7% | 37.5% |
Debt/Equity ratio | 1 | 1 |
Cost of debt | 4.3% | 4.5% |
After-tax WACC | 4.2% | 5.5% |
Selected WACC | 4.9% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
LWAY | Lifeway Foods Inc | 1.13 | 0.7 | 0.41 |
AMNF | Armanino Foods Of Distinction Inc | 0.01 | 0.06 | 0.06 |
BGA.V | BioNeutra Global Corp | 5.48 | 0.3 | 0.07 |
BSFC | Blue Star Foods Corp | 1.15 | 1.41 | 0.82 |
CUSI | Cuisine Solutions Inc | 0.02 | -0.03 | -0.03 |
ELAMF | Elamex SA de CV | 0.46 | 0.08 | 0.06 |
LUCC | Luca Inc | 0.17 | 1.1 | 0.99 |
MMMB | MamaMancini's Holdings Inc | 0.07 | 0.42 | 0.4 |
PLIN | China Xiangtai Food Co Ltd | 0.02 | 1.1 | 1.08 |
RMCF | Rocky Mountain Chocolate Factory Inc (Delaware) | 0.12 | 0.32 | 0.29 |
SWP.TO | Swiss Water Decaffeinated Coffee Inc | 3.79 | 0.7 | 0.21 |
Low | High | |
Unlevered beta | 0.21 | 0.4 |
Relevered beta | 0.1 | 0.39 |
Adjusted relevered beta | 0.4 | 0.59 |
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 LWAY:
cost_of_equity (6.95%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.4) + 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.