VITL WACC - Weighted Average Cost of Capital
The WACC of Vital Farms Inc (VITL) is 6.0%.
| Range | Selected | |
| Cost of equity | 5.2% - 6.8% | 6% |
| Tax rate | 22.6% - 37.2% | 29.9% |
| Cost of debt | 4.5% - 14.4% | 9.45% |
| WACC | 5.2% - 6.8% | 6.0% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.3 | 0.34 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.2% | 6.8% |
| Tax rate | 22.6% | 37.2% |
| Debt/Equity ratio | 0.01 | 0.01 |
| Cost of debt | 4.5% | 14.4% |
| After-tax WACC | 5.2% | 6.8% |
| Selected WACC | 6.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| VITL | Vital Farms Inc | 0.01 | 0.5 | 0.49 |
| CAG | Conagra Brands Inc | 0.79 | -0.19 | -0.12 |
| CPB | Campbell Soup Co | 0.72 | 0.04 | 0.03 |
| GIS | General Mills Inc | 0.44 | -0.16 | -0.12 |
| HSY | Hershey Co | 0.16 | -0.15 | -0.13 |
| K | Kellogg Co | 0.2 | 0.01 | 0.01 |
| KHC | Kraft Heinz Co | 0.64 | -0.06 | -0.04 |
| MDLZ | Mondelez International Inc | 0.21 | -0.06 | -0.05 |
| MKC | McCormick & Company Inc | 0.23 | 0.11 | 0.1 |
| TSN | Tyson Foods Inc | 0.49 | 0.05 | 0.04 |
| Low | High | |
| Unlevered beta | -0.05 | 0.02 |
| Relevered beta | -0.04 | 0.01 |
| Adjusted relevered beta | 0.3 | 0.34 |
VITL'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 VITL:
cost_of_equity (6.00%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.3) + 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.