MHK WACC - Weighted Average Cost of Capital
The WACC of Mohawk Industries Inc (MHK) is 7.5%.
| Range | Selected | |
| Cost of equity | 7.6% - 10.0% | 8.8% |
| Tax rate | 19.8% - 20.4% | 20.1% |
| Cost of debt | 4.0% - 4.5% | 4.25% |
| WACC | 6.5% - 8.4% | 7.5% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.82 | 0.92 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.6% | 10.0% |
| Tax rate | 19.8% | 20.4% |
| Debt/Equity ratio | 0.34 | 0.34 |
| Cost of debt | 4.0% | 4.5% |
| After-tax WACC | 6.5% | 8.4% |
| Selected WACC | 7.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| MHK | Mohawk Industries Inc | 0.34 | 0.74 | 0.58 |
| CSPR | Casper Sleep Inc | 0.23 | 0.93 | 0.78 |
| DXYN | Dixie Group Inc | 8.46 | 0.74 | 0.09 |
| FLXS | Flexsteel Industries Inc | 0.03 | 0.96 | 0.94 |
| HOFT | Hooker Furniture Corp | 0.22 | 0.92 | 0.78 |
| LEG | Leggett & Platt Inc | 1.47 | 1.23 | 0.57 |
| LZB | La-Z-Boy Inc | 0 | 0.64 | 0.64 |
| NTZ | Natuzzi SpA | 2.83 | 1.4 | 0.43 |
| ROWC | Rowe Co | 8580.07 | 0.97 | 0 |
| TPX | Tempur Sealy International Inc | 0.18 | 1.25 | 1.1 |
| Low | High | |
| Unlevered beta | 0.57 | 0.7 |
| Relevered beta | 0.73 | 0.88 |
| Adjusted relevered beta | 0.82 | 0.92 |
MHK'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 MHK:
cost_of_equity (8.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.82) + 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.