SMPL WACC - Weighted Average Cost of Capital
The WACC of Simply Good Foods Co (SMPL) is 6.4%.
| Range | Selected | |
| Cost of equity | 5.9% - 7.5% | 6.7% |
| Tax rate | 24.7% - 26.2% | 25.45% |
| Cost of debt | 4.8% - 6.1% | 5.45% |
| WACC | 5.7% - 7.2% | 6.4% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.44 | 0.47 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.9% | 7.5% |
| Tax rate | 24.7% | 26.2% |
| Debt/Equity ratio | 0.11 | 0.11 |
| Cost of debt | 4.8% | 6.1% |
| After-tax WACC | 5.7% | 7.2% |
| Selected WACC | 6.4% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| SMPL | Simply Good Foods Co | 0.11 | 0.57 | 0.53 |
| HLF.TO | High Liner Foods Inc | 0.67 | 0.38 | 0.25 |
| JBSS | John B Sanfilippo & Son Inc | 0.04 | 0.14 | 0.14 |
| JJSF | J & J Snack Foods Corp | 0 | 0.15 | 0.15 |
| LAS.A.TO | Lassonde Industries Inc | 0.31 | 0.55 | 0.45 |
| LNDC | Landec Corp | 0.39 | 1.07 | 0.83 |
| RSI.TO | Rogers Sugar Inc | 0.53 | 0.23 | 0.17 |
| TR | Tootsie Roll Industries Inc | 0 | 0.13 | 0.13 |
| TWNK | Hostess Brands Inc | 0.23 | 0.17 | 0.14 |
| UTZ | UTZ Brands Inc | 0.43 | -0.29 | -0.22 |
| Low | High | |
| Unlevered beta | 0.15 | 0.2 |
| Relevered beta | 0.16 | 0.21 |
| Adjusted relevered beta | 0.44 | 0.47 |
SMPL'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 SMPL:
cost_of_equity (6.70%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.44) + 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.