WIRE
Encore Wire Corp
Price:  
289.84 
USD
Volume:  
1,390,950.00
United States | Electrical Equipment
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WIRE WACC - Weighted Average Cost of Capital

The WACC of Encore Wire Corp (WIRE) is 7.6%.

The Cost of Equity of Encore Wire Corp (WIRE) is 11.40%.
The Cost of Debt of Encore Wire Corp (WIRE) is 5.00%.

Range Selected
Cost of equity 9.10% - 13.70% 11.40%
Tax rate 22.80% - 23.00% 22.90%
Cost of debt 5.00% - 5.00% 5.00%
WACC 6.5% - 8.8% 7.6%
WACC

WIRE WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.14 1.57
Additional risk adjustments 0.0% 0.5%
Cost of equity 9.10% 13.70%
Tax rate 22.80% 23.00%
Debt/Equity ratio 1 1
Cost of debt 5.00% 5.00%
After-tax WACC 6.5% 8.8%
Selected WACC 7.6%

WIRE'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 WIRE:

cost_of_equity (11.40%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.14) + 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.