USFD WACC - Weighted Average Cost of Capital
The WACC of US Foods Holding Corp (USFD) is 6.5%.
| Range | Selected | |
| Cost of equity | 5.7% - 8.8% | 7.25% |
| Tax rate | 23.3% - 24.2% | 23.75% |
| Cost of debt | 4.9% - 5.3% | 5.1% |
| WACC | 5.3% - 7.7% | 6.5% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.41 | 0.7 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.7% | 8.8% |
| Tax rate | 23.3% | 24.2% |
| Debt/Equity ratio | 0.29 | 0.29 |
| Cost of debt | 4.9% | 5.3% |
| After-tax WACC | 5.3% | 7.7% |
| Selected WACC | 6.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| USFD | US Foods Holding Corp | 0.29 | 0.89 | 0.73 |
| ANDE | Andersons Inc | 0.7 | 0.65 | 0.42 |
| CHEF | Chefs' Warehouse Inc | 0.28 | 1.23 | 1.01 |
| IVFH | Innovative Food Holdings Inc | 0.12 | -0.21 | -0.19 |
| PFGC | Performance Food Group Co | 0.31 | 0.94 | 0.76 |
| RAD | Rite Aid Corp | 80.09 | 0.85 | 0.01 |
| SPTN | SpartanNash Co | 1.18 | -0.01 | -0.01 |
| SYY | Sysco Corp | 0.35 | 0.13 | 0.1 |
| UNFI | United Natural Foods Inc | 1.18 | 0.95 | 0.5 |
| ELGEK.AT | Elgeka SA Trade Distributions Representations Industry | 2.31 | 0.22 | 0.08 |
| Low | High | |
| Unlevered beta | 0.09 | 0.45 |
| Relevered beta | 0.12 | 0.55 |
| Adjusted relevered beta | 0.41 | 0.7 |
USFD'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 USFD:
cost_of_equity (7.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.41) + 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.