NX WACC - Weighted Average Cost of Capital

The WACC of Quanex Building Products Corp (NX) is 8.0%.

The Cost of Equity of Quanex Building Products Corp (NX) is 8.35%.

The Cost of Debt of Quanex Building Products Corp (NX) is 9.40%.

	Range	Selected
Cost of equity	7.00% - 9.70%	8.35%
Tax rate	17.70% - 20.30%	19.00%
Cost of debt	7.50% - 11.30%	9.40%
WACC	6.6% - 9.4%	8.0%

WACC

NX WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	0.68	0.86

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.00%	9.70%

Tax rate	17.70%	20.30%
Debt/Equity ratio	0.73	0.73
Cost of debt	7.50%	11.30%

After-tax WACC	6.6%	9.4%


Selected WACC	8.0%

NX'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 NX:

cost_of_equity (8.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.68) + 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.