Medifast WACC - Weighted Average Cost of Capital
The WACC of Medifast Inc (MED) is 5.9%.
| Range | Selected | |
| Cost of equity | 6.3% - 9.7% | 8% |
| Tax rate | 23.2% - 23.7% | 23.45% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.1% - 6.7% | 5.9% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.53 | 0.86 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.3% | 9.7% |
| Tax rate | 23.2% | 23.7% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.1% | 6.7% |
| Selected WACC | 5.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| MED | Medifast Inc | 1.18 | 0.35 | 0.18 |
| ELF | e.l.f. Beauty Inc | 0.06 | 1.58 | 1.51 |
| EPC | Edgewell Personal Care Co | 0.93 | 0.48 | 0.28 |
| INBP | Integrated Biopharma Inc | 0 | -0.15 | -0.15 |
| IPAR | Inter Parfums Inc | 0.04 | 0.89 | 0.86 |
| JWEL.TO | Jamieson Wellness Inc | 0.3 | 0.58 | 0.47 |
| MSLP | MusclePharm Corp | 699.35 | 0.03 | 0 |
| NAII | Natural Alternatives International Inc | 0.63 | -0.12 | -0.08 |
| TLCC | Twinlab Consolidated Holdings Inc | 722.81 | 0.71 | 0 |
| USNA | USANA Health Sciences Inc | 0.04 | 0.91 | 0.88 |
| VERU | Veru Inc | 0.13 | 0.47 | 0.43 |
| Low | High | |
| Unlevered beta | 0.18 | 0.43 |
| Relevered beta | 0.3 | 0.79 |
| Adjusted relevered beta | 0.53 | 0.86 |
Medifast'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 Medifast:
cost_of_equity (8.00%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.53) + 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.