SJM
J M Smucker Co
Price:  
114.76 
USD
Volume:  
731,438.00
United States | Food Products
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SJM WACC - Weighted Average Cost of Capital

The WACC of J M Smucker Co (SJM) is 5.4%.

The Cost of Equity of J M Smucker Co (SJM) is 6.75%.
The Cost of Debt of J M Smucker Co (SJM) is 4.65%.

Range Selected
Cost of equity 5.60% - 7.90% 6.75%
Tax rate 25.20% - 25.30% 25.25%
Cost of debt 4.00% - 5.30% 4.65%
WACC 4.5% - 6.3% 5.4%
WACC

SJM WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.38 0.55
Additional risk adjustments 0.0% 0.5%
Cost of equity 5.60% 7.90%
Tax rate 25.20% 25.30%
Debt/Equity ratio 0.69 0.69
Cost of debt 4.00% 5.30%
After-tax WACC 4.5% 6.3%
Selected WACC 5.4%

SJM'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 SJM:

cost_of_equity (6.75%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.38) + 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.