PETS WACC - Weighted Average Cost of Capital
The WACC of Petmed Express Inc (PETS) is 6.2%.
| Range | Selected | |
| Cost of equity | 7.4% - 9.7% | 8.55% |
| Tax rate | 22.1% - 22.7% | 22.4% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.7% - 6.8% | 6.2% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.78 | 0.85 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.4% | 9.7% |
| Tax rate | 22.1% | 22.7% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.7% | 6.8% |
| Selected WACC | 6.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| PETS | Petmed Express Inc | 0.89 | 1.44 | 0.85 |
| DLTH | Duluth Holdings Inc | 0.86 | 0.7 | 0.42 |
| EBAY | eBay Inc | 0.23 | 0.45 | 0.38 |
| ETSY | ETSY Inc | 0.49 | 0.51 | 0.37 |
| FOOD.TO | Goodfood Market Corp | 4.33 | 1.61 | 0.37 |
| HEWA | HealthWarehouse.com Inc | 0.64 | -0.07 | -0.05 |
| KITS.TO | Kits Eyecare Ltd | 0.03 | 1.13 | 1.1 |
| MOHO | Ecmoho Ltd | 1.23 | 0.93 | 0.48 |
| PRTS | Carparts.Com Inc | 0.26 | 0.61 | 0.51 |
| PTS.TO | Points International Ltd | 0 | 1.62 | 1.62 |
| Low | High | |
| Unlevered beta | 0.4 | 0.49 |
| Relevered beta | 0.67 | 0.78 |
| Adjusted relevered beta | 0.78 | 0.85 |
PETS'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 PETS:
cost_of_equity (8.55%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.78) + 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.