XPO
XPO Logistics Inc
Price:  
113.83 
USD
Volume:  
2,053,651.00
United States | Air Freight & Logistics
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XPO WACC - Weighted Average Cost of Capital

The WACC of XPO Logistics Inc (XPO) is 8.2%.

The Cost of Equity of XPO Logistics Inc (XPO) is 9.15%.
The Cost of Debt of XPO Logistics Inc (XPO) is 5.75%.

Range Selected
Cost of equity 7.90% - 10.40% 9.15%
Tax rate 23.00% - 27.20% 25.10%
Cost of debt 5.40% - 6.10% 5.75%
WACC 7.2% - 9.2% 8.2%
WACC

XPO WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.88 0.99
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.90% 10.40%
Tax rate 23.00% 27.20%
Debt/Equity ratio 0.25 0.25
Cost of debt 5.40% 6.10%
After-tax WACC 7.2% 9.2%
Selected WACC 8.2%

XPO'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 XPO:

cost_of_equity (9.15%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.88) + 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.