SAFM
Sanderson Farms Inc
Price:  
204.00 
USD
Volume:  
790,570.00
United States | Food Products
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SAFM WACC - Weighted Average Cost of Capital

The WACC of Sanderson Farms Inc (SAFM) is 6.0%.

The Cost of Equity of Sanderson Farms Inc (SAFM) is 8.75%.
The Cost of Debt of Sanderson Farms Inc (SAFM) is 4.25%.

Range Selected
Cost of equity 7.40% - 10.10% 8.75%
Tax rate 22.80% - 27.90% 25.35%
Cost of debt 4.00% - 4.50% 4.25%
WACC 5.2% - 6.7% 6.0%
WACC

SAFM WACC calculation

Category Low High
Long-term bond rate 3.2% 3.7%
Equity market risk premium 4.2% 5.2%
Adjusted beta 1 1.13
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.40% 10.10%
Tax rate 22.80% 27.90%
Debt/Equity ratio 1 1
Cost of debt 4.00% 4.50%
After-tax WACC 5.2% 6.7%
Selected WACC 6.0%

SAFM'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 SAFM:

cost_of_equity (8.75%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (1) + 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.