VSTO WACC - Weighted Average Cost of Capital
The WACC of Vista Outdoor Inc (VSTO) is 7.9%.
| Range | Selected | |
| Cost of equity | 8.0% - 10.5% | 9.25% |
| Tax rate | 18.0% - 39.1% | 28.55% |
| Cost of debt | 4.0% - 4.5% | 4.25% |
| WACC | 7.0% - 8.8% | 7.9% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.9 | 1 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.0% | 10.5% |
| Tax rate | 18.0% | 39.1% |
| Debt/Equity ratio | 0.28 | 0.28 |
| Cost of debt | 4.0% | 4.5% |
| After-tax WACC | 7.0% | 8.8% |
| Selected WACC | 7.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| VSTO | Vista Outdoor Inc | 0.28 | 0.65 | 0.54 |
| CLAR | Clarus Corp | 0.02 | 0.7 | 0.69 |
| ELY | Callaway Golf Co | 0.3 | 1.75 | 1.43 |
| ESCA | Escalade Inc | 0.14 | 0.5 | 0.45 |
| GOLF | Acushnet Holdings Corp | 0.19 | 0.81 | 0.71 |
| MCFT | Mastercraft Boat Holdings Inc | 0.17 | 0.9 | 0.79 |
| NLS | Nautilus Inc | 0.96 | 1.59 | 0.92 |
| SWBI | Smith & Wesson Brands Inc | 0.19 | 0.44 | 0.39 |
| TOY.TO | Spin Master Corp | 0.29 | 1.17 | 0.95 |
| YETI | Yeti Holdings Inc | 0.03 | 0.91 | 0.89 |
| Low | High | |
| Unlevered beta | 0.7 | 0.83 |
| Relevered beta | 0.85 | 1 |
| Adjusted relevered beta | 0.9 | 1 |
VSTO'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 VSTO:
cost_of_equity (9.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.9) + 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.