PKE WACC - Weighted Average Cost of Capital
The WACC of Park Aerospace Corp (PKE) is 6.7%.
| Range | Selected | |
| Cost of equity | 7.3% - 12.0% | 9.65% |
| Tax rate | 25.2% - 28.4% | 26.8% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.5% - 7.8% | 6.7% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.75 | 1.28 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.3% | 12.0% |
| Tax rate | 25.2% | 28.4% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.5% | 7.8% |
| Selected WACC | 6.7% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| PKE | Park Aerospace Corp | 0.95 | 1.03 | 0.62 |
| AIRI | Air Industries Group | 1.94 | 0.97 | 0.4 |
| ASTC | Astrotech Corp | 0.02 | 0.28 | 0.28 |
| AZ.V | A2Z Smart Technologies Corp | 0.06 | 1.33 | 1.27 |
| BUKS | Butler National Corp | 0.41 | 0.94 | 0.72 |
| EH | Ehang Holdings Ltd | 0.01 | 1.39 | 1.38 |
| ETCC | Environmental Tectonics Corp | 0.98 | 0.53 | 0.31 |
| FLY.V | FLYHT Aerospace Solutions Ltd | 0.52 | -0.76 | -0.55 |
| ISSC | Innovative Solutions and Support Inc | 0.12 | 1.74 | 1.61 |
| MRS.V | Mission Ready Solutions Inc | 1.29 | 1.89 | 0.98 |
| NTS.V | Nanotech Security Corp | 0.01 | -0.04 | -0.04 |
| Low | High | |
| Unlevered beta | 0.4 | 0.72 |
| Relevered beta | 0.63 | 1.42 |
| Adjusted relevered beta | 0.75 | 1.28 |
PKE'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 PKE:
cost_of_equity (9.65%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.75) + 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.