USAP WACC - Weighted Average Cost of Capital
The WACC of Universal Stainless & Alloy Products Inc (USAP) is 7.3%.
| Range | Selected | |
| Cost of equity | 6.9% - 8.8% | 7.85% |
| Tax rate | 18.1% - 22.6% | 20.35% |
| Cost of debt | 5.1% - 5.6% | 5.35% |
| WACC | 6.4% - 8.1% | 7.3% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.66 | 0.71 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.9% | 8.8% |
| Tax rate | 18.1% | 22.6% |
| Debt/Equity ratio | 0.2 | 0.2 |
| Cost of debt | 5.1% | 5.6% |
| After-tax WACC | 6.4% | 8.1% |
| Selected WACC | 7.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| USAP | Universal Stainless & Alloy Products Inc | 0.2 | 0.66 | 0.57 |
| AP | Ampco-Pittsburgh Corp | 2.38 | 2.05 | 0.72 |
| FRD | Friedman Industries Inc | 0.37 | 0.59 | 0.46 |
| HUDI | Huadi International Group Co., Ltd. | 0.77 | 0.36 | 0.22 |
| MTWD | Metwood Inc | 0.04 | 1.07 | 1.04 |
| NPT.CN | Plaintree Systems Inc | 16.15 | 1.28 | 0.09 |
| OSN | Ossen Innovation Co Ltd | 1.06 | 0.95 | 0.52 |
| SIDGQ | Stamford Industrial Group Inc | 0.35 | 0 | 0 |
| SYNL | Synalloy Corp | 0.46 | 0.64 | 0.47 |
| ZKIN | ZK International Group Co Ltd | 1.31 | 1.34 | 0.66 |
| Low | High | |
| Unlevered beta | 0.47 | 0.54 |
| Relevered beta | 0.49 | 0.57 |
| Adjusted relevered beta | 0.66 | 0.71 |
USAP'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 USAP:
cost_of_equity (7.85%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.66) + 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.