Wendys WACC - Weighted Average Cost of Capital
The WACC of Wendys Co (WEN) is 6.2%.
| Range | Selected | |
| Cost of equity | 7.0% - 11.3% | 9.15% |
| Tax rate | 25.3% - 27.0% | 26.15% |
| Cost of debt | 4.6% - 7.0% | 5.8% |
| WACC | 4.8% - 7.6% | 6.2% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.68 | 1.15 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.0% | 11.3% |
| Tax rate | 25.3% | 27.0% |
| Debt/Equity ratio | 1.49 | 1.49 |
| Cost of debt | 4.6% | 7.0% |
| After-tax WACC | 4.8% | 7.6% |
| Selected WACC | 6.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| WEN | Wendys Co | 1.49 | 0.29 | 0.14 |
| ARCO | Arcos Dorados Holdings Inc | 0.5 | 0.18 | 0.14 |
| CAKE | Cheesecake Factory Inc | 0.17 | 0.75 | 0.67 |
| CBRL | Cracker Barrel Old Country Store Inc | 0.38 | 0.84 | 0.66 |
| JACK | Jack in the Box Inc | 4.53 | 0.67 | 0.16 |
| PLAY | Dave & Buster's Entertainment Inc | 2.1 | 0.78 | 0.31 |
| PZZA | Papa John's International Inc | 0.56 | 0.92 | 0.65 |
| SHAK | Shake Shack Inc | 0.05 | 1.14 | 1.09 |
| TAST | Carrols Restaurant Group Inc | 0.82 | -0.04 | -0.03 |
| TXRH | Texas Roadhouse Inc | 0 | 0.54 | 0.54 |
| Low | High | |
| Unlevered beta | 0.25 | 0.59 |
| Relevered beta | 0.52 | 1.22 |
| Adjusted relevered beta | 0.68 | 1.15 |
Wendys'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 Wendys:
cost_of_equity (9.15%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.68) + 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.