SHLDQ WACC - Weighted Average Cost of Capital
The WACC of Sears Holdings Corp (SHLDQ) is 6.8%.
| Range | Selected | |
| Cost of equity | 28.6% - 276.8% | 152.7% |
| Tax rate | 10.8% - 13.8% | 12.3% |
| Cost of debt | 7.0% - 7.8% | 7.4% |
| WACC | 6.3% - 7.2% | 6.8% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 5.37 | 48.56 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 28.6% | 276.8% |
| Tax rate | 10.8% | 13.8% |
| Debt/Equity ratio | 547.02 | 547.02 |
| Cost of debt | 7.0% | 7.8% |
| After-tax WACC | 6.3% | 7.2% |
| Selected WACC | 6.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| SHLDQ | Sears Holdings Corp | 547.02 | -0.66 | 0 |
| BIG | Big Lots Inc | 236.88 | 1.12 | 0.01 |
| CTC.A.TO | Canadian Tire Corporation Ltd | 0.9 | 0.59 | 0.33 |
| DDS | Dillard's Inc | 0.09 | 0.86 | 0.8 |
| DG | Dollar General Corp | 0.31 | -0.35 | -0.28 |
| JWN | Nordstrom Inc | 0.64 | 0.27 | 0.18 |
| KSS | Kohls Corp | 5.83 | 0.82 | 0.13 |
| M | Macy's Inc | 0.86 | 1.07 | 0.61 |
| QRTEA | Qurate Retail Inc | 46.23 | 0.94 | 0.02 |
| ECK.DE | Ludwig Beck am Rathauseck Textilhaus Feldmeier AG | 1.67 | -1.21 | -0.49 |
| Low | High | |
| Unlevered beta | 0.02 | 0.15 |
| Relevered beta | 7.52 | 71.99 |
| Adjusted relevered beta | 5.37 | 48.56 |
SHLDQ'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 SHLDQ:
cost_of_equity (152.70%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (5.37) + 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.