SPRS WACC - Weighted Average Cost of Capital
The WACC of Surge Components Inc (SPRS) is 5.9%.
| Range | Selected | |
| Cost of equity | 6.6% - 10.1% | 8.35% |
| Tax rate | 27.7% - 31.5% | 29.6% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.1% - 6.8% | 5.9% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.6 | 0.93 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.6% | 10.1% |
| Tax rate | 27.7% | 31.5% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.1% | 6.8% |
| Selected WACC | 5.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| SPRS | Surge Components Inc | 1.08 | 0.33 | 0.19 |
| HDT.L | Holders Technology PLC | 0.06 | 0.16 | 0.16 |
| AEY | ADDvantage Technologies Group Inc | 3.52 | 0.99 | 0.29 |
| AVT | Avnet Inc | 0.62 | 1.05 | 0.74 |
| CLHI | CLST Holdings Inc | 105.66 | 0.77 | 0.01 |
| EACO | EACO Corp | 0.02 | -0.19 | -0.19 |
| NSIT | Insight Enterprises Inc | 0.19 | 1.2 | 1.06 |
| SCSC | Scansource Inc | 0.15 | 1.28 | 1.16 |
| SNX | SYNNEX Corp | 0.33 | 1.23 | 1 |
| SWRM | Appswarm Inc | 5.09 | 1.78 | 0.39 |
| UUU | Universal Security Instruments Inc | 0.1 | -0.11 | -0.11 |
| Low | High | |
| Unlevered beta | 0.19 | 0.39 |
| Relevered beta | 0.4 | 0.9 |
| Adjusted relevered beta | 0.6 | 0.93 |
SPRS'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 SPRS:
cost_of_equity (8.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.6) + 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.