ROST
Ross Stores Inc
Price:  
140.49 
USD
Volume:  
2,133,454.00
United States | Specialty Retail
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Ross WACC - Weighted Average Cost of Capital

The WACC of Ross Stores Inc (ROST) is 7.7%.

The Cost of Equity of Ross Stores Inc (ROST) is 7.95%.
The Cost of Debt of Ross Stores Inc (ROST) is 4.25%.

Range Selected
Cost of equity 6.80% - 9.10% 7.95%
Tax rate 23.80% - 24.00% 23.90%
Cost of debt 4.00% - 4.50% 4.25%
WACC 6.6% - 8.9% 7.7%
WACC

Ross WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.64 0.76
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.80% 9.10%
Tax rate 23.80% 24.00%
Debt/Equity ratio 0.05 0.05
Cost of debt 4.00% 4.50%
After-tax WACC 6.6% 8.9%
Selected WACC 7.7%

Ross'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 Ross:

cost_of_equity (7.95%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.64) + 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.