SFM
Sprouts Farmers Market Inc
Price:  
173.93 
USD
Volume:  
1,973,319.00
United States | Food & Staples Retailing
Valuation
Overview
Financials
Forecast
Compare
Historical Price
SolvencyDividends
Transactions
People

SFM WACC - Weighted Average Cost of Capital

The WACC of Sprouts Farmers Market Inc (SFM) is 7.2%.

The Cost of Equity of Sprouts Farmers Market Inc (SFM) is 7.20%.
The Cost of Debt of Sprouts Farmers Market Inc (SFM) is 4.40%.

Range Selected
Cost of equity 6.20% - 8.20% 7.20%
Tax rate 24.50% - 24.80% 24.65%
Cost of debt 4.30% - 4.50% 4.40%
WACC 6.2% - 8.2% 7.2%
WACC

SFM WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.51 0.6
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.20% 8.20%
Tax rate 24.50% 24.80%
Debt/Equity ratio 0 0
Cost of debt 4.30% 4.50%
After-tax WACC 6.2% 8.2%
Selected WACC 7.2%

SFM'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 SFM:

cost_of_equity (7.20%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.51) + 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.