The WACC of Oil-Dri Corporation of America (ODC) is 6.0%.
Range | Selected | |
Cost of equity | 5.4% - 6.8% | 6.1% |
Tax rate | 16.7% - 18.2% | 17.45% |
Cost of debt | 4.5% - 4.9% | 4.7% |
WACC | 5.3% - 6.6% | 6.0% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 0.33 | 0.35 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 5.4% | 6.8% |
Tax rate | 16.7% | 18.2% |
Debt/Equity ratio | 0.06 | 0.06 |
Cost of debt | 4.5% | 4.9% |
After-tax WACC | 5.3% | 6.6% |
Selected WACC | 6.0% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
ODC | Oil-Dri Corporation of America | 0.06 | 0.54 | 0.52 |
CENT | Central Garden & Pet Co | 0.47 | 0.39 | 0.28 |
CHD | Church & Dwight Co Inc | 0.09 | 0.01 | 0.01 |
CL | Colgate-Palmolive Co | 0.11 | 0.02 | 0.02 |
ENR | Energizer Holdings Inc | 1.95 | 0.42 | 0.16 |
KMB | Kimberly-Clark Corp | 0.17 | 0.03 | 0.03 |
OBCI | Ocean Bio-Chem Inc | 0.07 | -0.24 | -0.23 |
PURE | PURE Biosciences Inc | 0.31 | -0.91 | -0.73 |
WDFC | WD-40 Co | 0.03 | -0.05 | -0.05 |
SUY1V.HE | Suominen Oyj | 0.92 | -0.02 | -0.01 |
Low | High | |
Unlevered beta | 0 | 0.02 |
Relevered beta | 0 | 0.03 |
Adjusted relevered beta | 0.33 | 0.35 |
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 ODC:
cost_of_equity (6.10%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.33) + 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.