PETQ WACC - Weighted Average Cost of Capital
The WACC of PetIQ Inc (PETQ) is 6.0%.
| Range | Selected | |
| Cost of equity | 5.4% - 7.1% | 6.25% |
| Tax rate | 14.2% - 23.7% | 18.95% |
| Cost of debt | 6.0% - 7.5% | 6.75% |
| WACC | 5.3% - 6.7% | 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 | 0.41 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.4% | 7.1% |
| Tax rate | 14.2% | 23.7% |
| Debt/Equity ratio | 0.48 | 0.48 |
| Cost of debt | 6.0% | 7.5% |
| After-tax WACC | 5.3% | 6.7% |
| Selected WACC | 6.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| PETQ | PetIQ Inc | 0.48 | 0.61 | 0.44 |
| FAGR.BR | Fagron NV | 0.25 | 0.38 | 0.32 |
| AHCO | Adapthealth Corp | 1.75 | 0.22 | 0.09 |
| AXRX | Amexdrug Corp | 3.54 | -0.08 | -0.02 |
| CNBI | China BCT Pharmacy Group Inc | 0.1 | 0 | 0 |
| GEG | Great Elm Group Inc | 1.14 | -0.04 | -0.02 |
| MDRM | Modern Mobility Aids Inc | 0.87 | -0.06 | -0.03 |
| MJNA | Medical Marijuana Inc | 7.02 | 0.53 | 0.08 |
| TCAN.CN | Transcanna Holdings Inc | 24.82 | 2.07 | 0.1 |
| Low | High | |
| Unlevered beta | 0.02 | 0.09 |
| Relevered beta | 0 | 0.12 |
| Adjusted relevered beta | 0.33 | 0.41 |
PETQ'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 PETQ:
cost_of_equity (6.25%) = 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.