TACO WACC - Weighted Average Cost of Capital
The WACC of Del Taco Restaurants Inc (TACO) is 7.5%.
| Range | Selected | |
| Cost of equity | 6.1% - 11.1% | 8.6% |
| Tax rate | 18.0% - 32.1% | 25.05% |
| Cost of debt | 4.0% - 4.5% | 4.25% |
| WACC | 5.5% - 9.5% | 7.5% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 0.68 | 1.33 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.1% | 11.1% |
| Tax rate | 18.0% | 32.1% |
| Debt/Equity ratio | 0.25 | 0.25 |
| Cost of debt | 4.0% | 4.5% |
| After-tax WACC | 5.5% | 9.5% |
| Selected WACC | 7.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| TACO | Del Taco Restaurants Inc | 0.25 | 2.09 | 1.77 |
| BDL | Flanigan's Enterprises Inc | 0.49 | 0.06 | 0.05 |
| FRGI | Fiesta Restaurant Group Inc | 0 | 0.61 | 0.61 |
| GCFB | Granite City Food & Brewery Ltd | 38785.16 | 266.68 | 0.01 |
| IPIC | Ipic Entertainment Inc | 26547172 | 0 | 0 |
| LOCO | El Pollo Loco Holdings Inc | 0.27 | 1.06 | 0.89 |
| MHGU | Meritage Hospitality Group Inc | 1.74 | 0.24 | 0.11 |
| MTY.TO | MTY Food Group Inc | 1.19 | 1.07 | 0.58 |
| NATH | Nathan's Famous Inc | 0.15 | 0.68 | 0.61 |
| NDLS | Noodles & Co | 2.69 | 0.92 | 0.31 |
| Low | High | |
| Unlevered beta | 0.23 | 0.59 |
| Relevered beta | 0.52 | 1.49 |
| Adjusted relevered beta | 0.68 | 1.33 |
TACO'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 TACO:
cost_of_equity (8.60%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (0.68) + 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.