SBH WACC - Weighted Average Cost of Capital
The WACC of Sally Beauty Holdings Inc (SBH) is 7.3%.
| Range | Selected | |
| Cost of equity | 9.2% - 12.0% | 10.6% |
| Tax rate | 26.0% - 26.4% | 26.2% |
| Cost of debt | 5.1% - 6.3% | 5.7% |
| WACC | 6.4% - 8.2% | 7.3% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.15 | 1.27 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.2% | 12.0% |
| Tax rate | 26.0% | 26.4% |
| Debt/Equity ratio | 1.05 | 1.05 |
| Cost of debt | 5.1% | 6.3% |
| After-tax WACC | 6.4% | 8.2% |
| Selected WACC | 7.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| SBH | Sally Beauty Holdings Inc | 1.05 | 0.53 | 0.3 |
| BCI.TO | New Look Vision Group Inc | 0.47 | 1.05 | 0.78 |
| BGFV | Big 5 Sporting Goods Corp | 0.83 | 0.69 | 0.43 |
| BNED | Barnes & Noble Education Inc | 0.53 | 1.52 | 1.1 |
| ELA | Envela Corp | 0.08 | 0.65 | 0.61 |
| EYE | National Vision Holdings Inc | 0.23 | 1 | 0.85 |
| FAF.TO | Fire & Flower Holdings Corp | 2.38 | 1.38 | 0.5 |
| HIBB | Hibbett Sports Inc | 0.05 | 1.91 | 1.85 |
| HZO | MarineMax Inc | 2.18 | 2.09 | 0.8 |
| RTON | Right On Brands Inc | 0.4 | 0.96 | 0.74 |
| Low | High | |
| Unlevered beta | 0.69 | 0.79 |
| Relevered beta | 1.22 | 1.4 |
| Adjusted relevered beta | 1.15 | 1.27 |
SBH'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 SBH:
cost_of_equity (10.60%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.15) + 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.