REED WACC - Weighted Average Cost of Capital
The WACC of Reed's Inc (REED) is 7.7%.
| Range | Selected | |
| Cost of equity | 5.5% - 7.4% | 6.45% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 7.0% - 24.6% | 15.8% |
| WACC | 5.4% - 10.1% | 7.7% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.35 | 0.45 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.5% | 7.4% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 0.34 | 0.34 |
| Cost of debt | 7.0% | 24.6% |
| After-tax WACC | 5.4% | 10.1% |
| Selected WACC | 7.7% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| REED | Reed's Inc | 0.34 | 0.27 | 0.21 |
| GHMP | Good Hemp Inc | 0.7 | 0.38 | 0.25 |
| JSDA | Jones Soda Co | 0.01 | 1.24 | 1.23 |
| KO | Coca-Cola Co | 0.15 | 0.1 | 0.09 |
| MLHC | M Line Holdings Inc | 3102.72 | 0 | 0 |
| MOJO | MOJO Organics Inc | 0.01 | 0.44 | 0.44 |
| PEP | PepsiCo Inc | 0.25 | 0 | 0 |
| PRMW.TO | Primo Water Corp (MISSISSAUGA) | 0.3 | -0.25 | -0.2 |
| TNY.CN | Tinley Beverage Company Inc | 0.37 | -0.54 | -0.42 |
| WVVI | Willamette Valley Vineyards Inc | 0.62 | 0.06 | 0.04 |
| Low | High | |
| Unlevered beta | 0.03 | 0.14 |
| Relevered beta | 0.03 | 0.18 |
| Adjusted relevered beta | 0.35 | 0.45 |
REED'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 REED:
cost_of_equity (6.45%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.35) + 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.