WOOF
Petco Health and Wellness Company Inc
Price:  
3.30 
USD
Volume:  
5,004,899.00
United States | Specialty Retail
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Petco WACC - Weighted Average Cost of Capital

The WACC of Petco Health and Wellness Company Inc (WOOF) is 13.1%.

The Cost of Equity of Petco Health and Wellness Company Inc (WOOF) is 13.05%.
The Cost of Debt of Petco Health and Wellness Company Inc (WOOF) is 15.25%.

Range Selected
Cost of equity 10.40% - 15.70% 13.05%
Tax rate 7.10% - 15.30% 11.20%
Cost of debt 6.60% - 23.90% 15.25%
WACC 7.6% - 18.6% 13.1%
WACC

Petco WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.41 1.93
Additional risk adjustments 0.0% 0.5%
Cost of equity 10.40% 15.70%
Tax rate 7.10% 15.30%
Debt/Equity ratio 1.92 1.92
Cost of debt 6.60% 23.90%
After-tax WACC 7.6% 18.6%
Selected WACC 13.1%

Petco'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 Petco:

cost_of_equity (13.05%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.41) + 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.