VVV
Valvoline Inc
Price:  
38.58 
USD
Volume:  
1,424,425
United States | Chemicals

Valvoline WACC - Weighted Average Cost of Capital

The WACC of Valvoline Inc (VVV) is 7.7%.

The Cost of Equity of Valvoline Inc (VVV) is 8.85%.
The Cost of Debt of Valvoline Inc (VVV) is 4.55%.

RangeSelected
Cost of equity7.6% - 10.1%8.85%
Tax rate23.7% - 24.2%23.95%
Cost of debt4.0% - 5.1%4.55%
WACC6.6% - 8.8%7.7%
WACC

Valvoline WACC calculation

CategoryLowHigh
Long-term bond rate3.9%4.4%
Equity market risk premium4.6%5.6%
Adjusted beta0.80.94
Additional risk adjustments0.0%0.5%
Cost of equity7.6%10.1%
Tax rate23.7%24.2%
Debt/Equity ratio
0.270.27
Cost of debt4.0%5.1%
After-tax WACC6.6%8.8%
Selected WACC7.7%

Valvoline'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 Valvoline:

cost_of_equity (8.85%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.8) + 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.