MEC WACC - Weighted Average Cost of Capital
The WACC of Mayville Engineering Company Inc (MEC) is 10.1%.
| Range | Selected | |
| Cost of equity | 9.0% - 12.3% | 10.65% |
| Tax rate | 18.7% - 21.2% | 19.95% |
| Cost of debt | 7.8% - 12.4% | 10.1% |
| WACC | 8.5% - 11.8% | 10.1% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.12 | 1.32 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.0% | 12.3% |
| Tax rate | 18.7% | 21.2% |
| Debt/Equity ratio | 0.25 | 0.25 |
| Cost of debt | 7.8% | 12.4% |
| After-tax WACC | 8.5% | 11.8% |
| Selected WACC | 10.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| MEC | Mayville Engineering Company Inc | 0.25 | 0.52 | 0.44 |
| EML | Eastern Co | 0.32 | 0.91 | 0.72 |
| GHM | Graham Corp | 0 | 1.96 | 1.96 |
| GRC | Gorman-Rupp Co | 0.38 | 1.15 | 0.88 |
| GTEC | Greenland Technologies Holding Corp | 0.56 | 1.83 | 1.27 |
| LXFR | Luxfer Holdings PLC | 0.14 | 1.16 | 1.04 |
| SIS.TO | Savaria Corp | 0.21 | 0.94 | 0.8 |
| SXI | Standex International Corp | 0.08 | 1.29 | 1.21 |
| VLN.TO | Velan Inc | 0.11 | 1.37 | 1.26 |
| XONE | ExOne Co | 0.01 | 1.32 | 1.31 |
| Low | High | |
| Unlevered beta | 0.98 | 1.23 |
| Relevered beta | 1.18 | 1.48 |
| Adjusted relevered beta | 1.12 | 1.32 |
MEC'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 MEC:
cost_of_equity (10.65%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.12) + 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.