SKX
Skechers USA Inc
Price:  
63.08 
USD
Volume:  
7,853,227.00
United States | Textiles, Apparel & Luxury Goods
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Skechers WACC - Weighted Average Cost of Capital

The WACC of Skechers USA Inc (SKX) is 8.6%.

The Cost of Equity of Skechers USA Inc (SKX) is 8.85%.
The Cost of Debt of Skechers USA Inc (SKX) is 4.90%.

Range Selected
Cost of equity 7.60% - 10.10% 8.85%
Tax rate 17.40% - 18.20% 17.80%
Cost of debt 4.50% - 5.30% 4.90%
WACC 7.4% - 9.9% 8.6%
WACC

Skechers WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.81 0.94
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.60% 10.10%
Tax rate 17.40% 18.20%
Debt/Equity ratio 0.05 0.05
Cost of debt 4.50% 5.30%
After-tax WACC 7.4% 9.9%
Selected WACC 8.6%

Skechers'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 Skechers:

cost_of_equity (8.85%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.81) + 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.