The WACC of Revolve Group Inc (RVLV) is 7.5%.
Range | Selected | |
Cost of equity | 8.3% - 13.7% | 11% |
Tax rate | 16.2% - 23.8% | 20% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 6.2% - 8.8% | 7.5% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 0.96 | 1.58 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 8.3% | 13.7% |
Tax rate | 16.2% | 23.8% |
Debt/Equity ratio | 1 | 1 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 6.2% | 8.8% |
Selected WACC | 7.5% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
RVLV | Revolve Group Inc | 1.04 | 1.86 | 1.03 |
DLTH | Duluth Holdings Inc | 0.86 | 0.7 | 0.42 |
FLWS | 1-800-Flowers.Com Inc | 0.61 | 1.5 | 1.02 |
FOOD.TO | Goodfood Market Corp | 4.33 | 1.61 | 0.37 |
GRPN | Groupon Inc | 0.25 | 1.9 | 1.6 |
ID | Parts Id Inc | 2 | 1.39 | 0.55 |
LEJU | Leju Holdings Ltd | 0.05 | 1.56 | 1.5 |
MOHO | Ecmoho Ltd | 1.23 | 0.93 | 0.48 |
PRTS | Carparts.Com Inc | 0.26 | 0.61 | 0.51 |
PTS.TO | Points International Ltd | 0 | 1.62 | 1.62 |
REAL | RealReal Inc | 0.77 | 1.77 | 1.11 |
Low | High | |
Unlevered beta | 0.55 | 1.03 |
Relevered beta | 0.94 | 1.87 |
Adjusted relevered beta | 0.96 | 1.58 |
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 RVLV:
cost_of_equity (11.00%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.96) + 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.