VGR WACC - Weighted Average Cost of Capital
The WACC of Vector Group Ltd (VGR) is 7.3%.
| Range | Selected | |
| Cost of equity | 7.1% - 10.2% | 8.65% |
| Tax rate | 27.3% - 28.8% | 28.05% |
| Cost of debt | 6.1% - 7.8% | 6.95% |
| WACC | 6.1% - 8.5% | 7.3% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.71 | 0.95 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.1% | 10.2% |
| Tax rate | 27.3% | 28.8% |
| Debt/Equity ratio | 0.58 | 0.58 |
| Cost of debt | 6.1% | 7.8% |
| After-tax WACC | 6.1% | 8.5% |
| Selected WACC | 7.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| VGR | Vector Group Ltd | 0.58 | 0.19 | 0.13 |
| BDC | Belden Inc | 0.27 | 1.35 | 1.13 |
| HNI | HNI Corp | 0.16 | 0.85 | 0.76 |
| NHLE | Nhale Inc | 0.72 | 1.01 | 0.67 |
| RLX | RLX Technology Inc | 0.02 | 0.32 | 0.32 |
| TCL.A.TO | Transcontinental Inc | 0.58 | 0.64 | 0.45 |
| TPB | Turning Point Brands Inc | 0.19 | 0.72 | 0.64 |
| TRIP.CN | Red Light Holland Corp | 0.17 | 1.31 | 1.17 |
| UVV | Universal Corp | 0.72 | 0.38 | 0.25 |
| VHUB | Vapor Hub International Inc | 3.84 | 1.04 | 0.28 |
| Low | High | |
| Unlevered beta | 0.4 | 0.65 |
| Relevered beta | 0.57 | 0.93 |
| Adjusted relevered beta | 0.71 | 0.95 |
VGR'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 VGR:
cost_of_equity (8.65%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.71) + 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.