REVG WACC - Weighted Average Cost of Capital
The WACC of REV Group Inc (REVG) is 9.4%.
| Range | Selected | |
| Cost of equity | 8.0% - 11.2% | 9.6% |
| Tax rate | 23.9% - 25.1% | 24.5% |
| Cost of debt | 5.1% - 9.1% | 7.1% |
| WACC | 7.8% - 11.0% | 9.4% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.89 | 1.14 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.0% | 11.2% |
| Tax rate | 23.9% | 25.1% |
| Debt/Equity ratio | 0.04 | 0.04 |
| Cost of debt | 5.1% | 9.1% |
| After-tax WACC | 7.8% | 11.0% |
| Selected WACC | 9.4% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| REVG | REV Group Inc | 0.04 | 1.52 | 1.47 |
| ASTE | Astec Industries Inc | 0.13 | 1.34 | 1.22 |
| FSS | Federal Signal Corp | 0.04 | 1.14 | 1.11 |
| GBX | Greenbrier Companies Inc | 1.24 | 0.72 | 0.37 |
| MNTX | Manitex International Inc | 0.8 | 1.86 | 1.16 |
| MTOR | Meritor Inc | 0.4 | 1.53 | 1.18 |
| NFI.TO | NFI Group Inc | 0.88 | 0.58 | 0.35 |
| TRN | Trinity Industries Inc | 2.71 | 0.99 | 0.33 |
| WNC | Wabash National Corp | 1.09 | 0.63 | 0.34 |
| WPRT.TO | Westport Fuel Systems Inc | 0.67 | 2.04 | 1.36 |
| Low | High | |
| Unlevered beta | 0.82 | 1.16 |
| Relevered beta | 0.84 | 1.21 |
| Adjusted relevered beta | 0.89 | 1.14 |
REVG'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 REVG:
cost_of_equity (9.60%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.89) + 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.