LYTS WACC - Weighted Average Cost of Capital
The WACC of LSI Industries Inc (LYTS) is 8.1%.
| Range | Selected | |
| Cost of equity | 7.4% - 9.8% | 8.6% |
| Tax rate | 22.3% - 23.5% | 22.9% |
| Cost of debt | 4.5% - 4.6% | 4.55% |
| WACC | 7.0% - 9.2% | 8.1% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.77 | 0.88 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.4% | 9.8% |
| Tax rate | 22.3% | 23.5% |
| Debt/Equity ratio | 0.11 | 0.11 |
| Cost of debt | 4.5% | 4.6% |
| After-tax WACC | 7.0% | 9.2% |
| Selected WACC | 8.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| LYTS | LSI Industries Inc | 0.11 | 1.28 | 1.18 |
| AMOT | Allied Motion Technologies Inc | 0.43 | 1.71 | 1.29 |
| APWC | Asia Pacific Wire & Cable Corporation Ltd | 0.97 | 0.13 | 0.08 |
| CPQQ | China Power Equipment Inc | 0 | 0 | 0 |
| HMM.A.TO | Hammond Manufacturing Company Ltd | 0.53 | 0.87 | 0.62 |
| OESX | Orion Energy Systems Inc | 0.41 | 0.76 | 0.58 |
| PLPC | Preformed Line Products Co | 0.04 | 0.75 | 0.73 |
| SVT | Servotronics Inc | 0.08 | 0.19 | 0.18 |
| THR | Thermon Group Holdings Inc | 0.17 | 1.16 | 1.03 |
| ULBI | Ultralife Corp | 0.57 | 1.17 | 0.81 |
| Low | High | |
| Unlevered beta | 0.6 | 0.76 |
| Relevered beta | 0.66 | 0.82 |
| Adjusted relevered beta | 0.77 | 0.88 |
LYTS'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 LYTS:
cost_of_equity (8.60%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.77) + 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.