PKOH
Park Ohio Holdings Corp
Price:  
17.88 
USD
Volume:  
18,674.00
United States | Machinery
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PKOH WACC - Weighted Average Cost of Capital

The WACC of Park Ohio Holdings Corp (PKOH) is 8.9%.

The Cost of Equity of Park Ohio Holdings Corp (PKOH) is 18.60%.
The Cost of Debt of Park Ohio Holdings Corp (PKOH) is 6.95%.

Range Selected
Cost of equity 16.60% - 20.60% 18.60%
Tax rate 26.20% - 27.00% 26.60%
Cost of debt 6.40% - 7.50% 6.95%
WACC 8.1% - 9.7% 8.9%
WACC

PKOH WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 2.76 2.8
Additional risk adjustments 0.0% 0.5%
Cost of equity 16.60% 20.60%
Tax rate 26.20% 27.00%
Debt/Equity ratio 2.57 2.57
Cost of debt 6.40% 7.50%
After-tax WACC 8.1% 9.7%
Selected WACC 8.9%

PKOH'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 PKOH:

cost_of_equity (18.60%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (2.76) + 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.