PATK
Patrick Industries Inc
Price:  
88.08 
USD
Volume:  
248,059.00
United States | Auto Components
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PATK WACC - Weighted Average Cost of Capital

The WACC of Patrick Industries Inc (PATK) is 6.4%.

The Cost of Equity of Patrick Industries Inc (PATK) is 7.25%.
The Cost of Debt of Patrick Industries Inc (PATK) is 5.85%.

Range Selected
Cost of equity 5.40% - 9.10% 7.25%
Tax rate 24.20% - 24.90% 24.55%
Cost of debt 5.60% - 6.10% 5.85%
WACC 5.1% - 7.7% 6.4%
WACC

PATK WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.34 0.75
Additional risk adjustments 0.0% 0.5%
Cost of equity 5.40% 9.10%
Tax rate 24.20% 24.90%
Debt/Equity ratio 0.44 0.44
Cost of debt 5.60% 6.10%
After-tax WACC 5.1% 7.7%
Selected WACC 6.4%

PATK'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 PATK:

cost_of_equity (7.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.34) + 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.