RGR WACC - Weighted Average Cost of Capital
The WACC of Sturm Ruger & Company Inc (RGR) is 6.9%.
| Range | Selected | |
| Cost of equity | 7.7% - 11.7% | 9.7% |
| Tax rate | 18.8% - 21.3% | 20.05% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.9% - 7.8% | 6.9% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.84 | 1.23 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.7% | 11.7% |
| Tax rate | 18.8% | 21.3% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.9% | 7.8% |
| Selected WACC | 6.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| RGR | Sturm Ruger & Company Inc | 0.82 | 0.07 | 0.04 |
| CLAR | Clarus Corp | 0.02 | 0.73 | 0.72 |
| ELY | Callaway Golf Co | 0.3 | 1.75 | 1.41 |
| ESCA | Escalade Inc | 0.12 | 0.49 | 0.45 |
| LEAT | Leatt Corp | 0.02 | 0.38 | 0.38 |
| MCFT | Mastercraft Boat Holdings Inc | 0.16 | 0.88 | 0.77 |
| NLS | Nautilus Inc | 0.96 | 1.59 | 0.9 |
| POWW | Ammo Munitions Inc | 0.05 | 1.3 | 1.26 |
| SWBI | Smith & Wesson Brands Inc | 0.18 | 0.4 | 0.35 |
| TVPC | Twin Vee Powercats Inc | 0.07 | -0.09 | -0.08 |
| Low | High | |
| Unlevered beta | 0.42 | 0.74 |
| Relevered beta | 0.76 | 1.34 |
| Adjusted relevered beta | 0.84 | 1.23 |
RGR'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 RGR:
cost_of_equity (9.70%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.84) + 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.