RXN WACC - Weighted Average Cost of Capital
The WACC of Rexnord Corp (RXN) is 8.8%.
| Range | Selected | |
| Cost of equity | 8.2% - 11.0% | 9.6% |
| Tax rate | 22.6% - 23.1% | 22.85% |
| Cost of debt | 4.2% - 4.5% | 4.35% |
| WACC | 7.5% - 10.0% | 8.8% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 1.18 | 1.3 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.2% | 11.0% |
| Tax rate | 22.6% | 23.1% |
| Debt/Equity ratio | 0.15 | 0.15 |
| Cost of debt | 4.2% | 4.5% |
| After-tax WACC | 7.5% | 10.0% |
| Selected WACC | 8.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| RXN | Rexnord Corp | 0.15 | 1.4 | 1.25 |
| AIMC | Altra Industrial Motion Corp | 0.26 | 2.22 | 1.86 |
| B | Barnes Group Inc | 0.53 | 0.8 | 0.56 |
| FELE | Franklin Electric Co Inc | 0.03 | 0.84 | 0.82 |
| HY | Hyster-Yale Materials Handling Inc | 0.63 | 0.91 | 0.61 |
| ITT | ITT Inc | 0.06 | 1.39 | 1.34 |
| JBT | John Bean Technologies Corp | 0.16 | 0.39 | 0.35 |
| KMT | Kennametal Inc | 0.37 | 0.98 | 0.77 |
| WTS | Watts Water Technologies Inc | 0.03 | 0.82 | 0.81 |
| WWD | Woodward Inc | 0.07 | 1.29 | 1.22 |
| Low | High | |
| Unlevered beta | 0.79 | 0.98 |
| Relevered beta | 1.27 | 1.45 |
| Adjusted relevered beta | 1.18 | 1.3 |
RXN'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 RXN:
cost_of_equity (9.60%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (1.18) + 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.