SWBI
Smith & Wesson Brands Inc
Price:  
9.40 
USD
Volume:  
289,602.00
United States | Leisure Products
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SWBI WACC - Weighted Average Cost of Capital

The WACC of Smith & Wesson Brands Inc (SWBI) is 8.6%.

The Cost of Equity of Smith & Wesson Brands Inc (SWBI) is 9.55%.
The Cost of Debt of Smith & Wesson Brands Inc (SWBI) is 4.90%.

Range Selected
Cost of equity 8.40% - 10.70% 9.55%
Tax rate 23.20% - 23.50% 23.35%
Cost of debt 4.80% - 5.00% 4.90%
WACC 7.6% - 9.6% 8.6%
WACC

SWBI WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.98 1.04
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.40% 10.70%
Tax rate 23.20% 23.50%
Debt/Equity ratio 0.19 0.19
Cost of debt 4.80% 5.00%
After-tax WACC 7.6% 9.6%
Selected WACC 8.6%

SWBI'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 SWBI:

cost_of_equity (9.55%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.98) + 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.