PRTY WACC - Weighted Average Cost of Capital
The WACC of Party City Holdco Inc (PRTY) is 6.1%.
| Range | Selected | |
| Cost of equity | 15.2% - 56.7% | 35.95% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 4.0% - 10.2% | 7.1% |
| WACC | 3.3% - 8.9% | 6.1% |
| Category | Low | High |
| Long-term bond rate | 4.2% | 4.7% |
| Equity market risk premium | 5.0% | 6.0% |
| Adjusted beta | 2.2 | 8.6 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 15.2% | 56.7% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 33.88 | 33.88 |
| Cost of debt | 4.0% | 10.2% |
| After-tax WACC | 3.3% | 8.9% |
| Selected WACC | 6.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| PRTY | Party City Holdco Inc | 33.88 | 2.65 | 0.1 |
| BGFV | Big 5 Sporting Goods Corp | 0.8 | 1.73 | 1.09 |
| BNED | Barnes & Noble Education Inc | 0.52 | 1.71 | 1.24 |
| BWTL | Bowlin Travel Centers Inc | 0.36 | 0.01 | 0.01 |
| CLWY | Calloway's Nursery Inc | 0.1 | -0.34 | -0.31 |
| EYE | National Vision Holdings Inc | 0.18 | 1.17 | 1.03 |
| HIBB | Hibbett Sports Inc | 0.05 | 1.91 | 1.85 |
| HZO | MarineMax Inc | 1.9 | 2.06 | 0.87 |
| IDG.TO | Indigo Books and Music Inc | 7.22 | -0.8 | -0.13 |
| SPWH | Sportsmans Warehouse Holdings Inc | 0.75 | 0.15 | 0.1 |
| WCRS | Western Capital Resources Inc | 0.03 | 0.02 | 0.02 |
| Low | High | |
| Unlevered beta | 0.1 | 0.87 |
| Relevered beta | 2.79 | 12.34 |
| Adjusted relevered beta | 2.2 | 8.6 |
PRTY'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 PRTY:
cost_of_equity (35.95%) = risk_free_rate (4.45%) + equity_risk_premium (5.50%) * adjusted_beta (2.2) + 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.