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American DG Energy (American DG Energy) WACC % :10.66% (As of May. 11, 2024)


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What is American DG Energy WACC %?

As of today (2024-05-11), American DG Energy's weighted average cost of capital is 10.66%%. American DG Energy's ROIC % is 0.00% (calculated using TTM income statement data). American DG Energy earns returns that do not match up to its cost of capital. It will destroy value as it grows.

*Note: The beta of this company cannot be obtained because it has a price history shorter than 3 years. It will thus be set to 1 as default to calculate WACC.

For a comprehensive WACC calculation, please access the WACC Calculator.


American DG Energy WACC % Historical Data

The historical data trend for American DG Energy's WACC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

American DG Energy WACC % Chart

American DG Energy Annual Data
Trend Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16
WACC %
Get a 7-Day Free Trial Premium Member Only Premium Member Only 6.27 7.32 1.81 7.05 5.91

American DG Energy Quarterly Data
Jun12 Sep12 Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17
WACC % Get a 7-Day Free Trial Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 5.63 5.66 5.28 5.91 7.19

Competitive Comparison of American DG Energy's WACC %

For the Specialty Industrial Machinery subindustry, American DG Energy's WACC %, along with its competitors' market caps and WACC % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


American DG Energy's WACC % Distribution in the Industrial Products Industry

For the Industrial Products industry and Industrials sector, American DG Energy's WACC % distribution charts can be found below:

* The bar in red indicates where American DG Energy's WACC % falls into.



American DG Energy WACC % Calculation

The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. The WACC is commonly referred to as the firm's cost of capital. Generally speaking, a company's assets are financed by debt and equity. WACC is the average of the costs of these sources of financing, each of which is weighted by its respective use in the given situation. By taking a weighted average, we can see how much interest the company has to pay for every dollar it finances.

WACC=E/(E + D)*Cost of Equity+D/(E + D)*Cost of Debt*(1 - Tax Rate)

1. Weights:
Generally speaking, a company's assets are financed by debt and equity. We need to calculate the weight of equity and the weight of debt.
The market value of equity (E) is also called "Market Cap". As of today, American DG Energy's market capitalization (E) is $16.380 Mil.
The market value of debt is typically difficult to calculate, therefore, GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding the latest one-year quarterly average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together. As of Mar. 2017, American DG Energy's latest one-year quarterly average Book Value of Debt (D) is $6.8642 Mil.
a) weight of equity = E / (E + D) = 16.380 / (16.380 + 6.8642) = 0.7047
b) weight of debt = D / (E + D) = 6.8642 / (16.380 + 6.8642) = 0.2953

2. Cost of Equity:
GuruFocus uses Capital Asset Pricing Model (CAPM) to calculate the required rate of return. The formula is:
Cost of Equity = Risk-Free Rate of Return + Beta of Asset * (Expected Return of the Market - Risk-Free Rate of Return)
a) GuruFocus uses 10-Year Treasury Constant Maturity Rate as the risk-free rate. It is updated daily. The current risk-free rate is 4.5%. Please go to Economic Indicators page for more information. Please note that we use the 10-Year Treasury Constant Maturity Rate of the country/region where the company is headquartered. If the data for that country/region is not available, then we will use the 10-Year Treasury Constant Maturity Rate of the United States as default.
b) Beta is the sensitivity of the expected excess asset returns to the expected excess market returns. American DG Energy's beta cannot be obtained because it has a price history shorter than 3 years. It will thus be set to 1 as default to calculate WACC.
c) (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.
Cost of Equity = 4.5% + 1 * 6% = 10.5%

3. Cost of Debt:
GuruFocus uses latest TTM Interest Expense divided by the latest one-year quarterly average debt to get the simplified cost of debt.
As of Mar. 2017, American DG Energy's interest expense (positive number) was $0.759 Mil. Its total Book Value of Debt (D) is $6.8642 Mil.
Cost of Debt = 0.759 / 6.8642 = 11.0574%.

4. Multiply by one minus TTM Tax Rate:
GuruFocus uses the most recent TTM Tax Expense divided by the most recent TTM Pre-Tax Income to calculate the tax rate. The calculated TTM tax rate is limited to between 0% and 100%. If the calculated tax rate is higher than 100%, it is set to 100%. If the calculated tax rate is less than 0%, it is set to 0%.
The latest calculated TTM Tax Rate = 0.081 / -0.562 = -14.41%, which is less than 0%. Therefore it's set to 0%.

American DG Energy's Weighted Average Cost Of Capital (WACC) for Today is calculated as:

WACC=E / (E + D)*Cost of Equity+D / (E + D)*Cost of Debt*(1 - Tax Rate)
=0.7047*10.5%+0.2953*11.0574%*(1 - 0%)
=10.66%

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


American DG Energy  (AMEX:ADGE) WACC % Explanation

Because it costs money to raise capital. A firm that generates higher ROIC % than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, American DG Energy's weighted average cost of capital is 10.66%%. American DG Energy's ROIC % is 0.00% (calculated using TTM income statement data). American DG Energy earns returns that do not match up to its cost of capital. It will destroy value as it grows.

*Note: The beta of this company cannot be obtained because it has a price history shorter than 3 years. It will thus be set to 1 as default to calculate WACC.


Be Aware

1. GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding latest one-year quarterly average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together.
For companies that report quarterly, GuruFocus combines all of the most recent year's quarterly debt data from the beginning of the year to the year-end and calculates the average.
For companies that report semi-annually, GuruFocus combines all of the most recent year's semi-annual debt data from the start of the year to the year-end and calculates the average.
For companies that report annually, GuruFocus combines the beginning and ending annual debt data from the most recent year and then calculates the average.

2. The WACC formula discussed above does not include Preferred Stock. Please adjust if preferred stock is considered.

3. (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.

4. GuruFocus uses the latest TTM Interest Expense divided by the latest one-year quarterly average debt to get the simplified cost of debt.


Related Terms

American DG Energy (American DG Energy) Business Description

Traded in Other Exchanges
N/A
Address
American DG Energy Inc is a Delaware corporation was incorporated on July 24, 2001. The Company installs, owns, operates and maintains complete DG systems, or energy systems, and other complementary systems at customer sites and sells electricity, hot water, heat and cooling energy under long-term contracts at prices guaranteed to the customer to be below conventional utility rates. As of December 31, 2013, the Company had installed 109 energy systems. The energy systems are generally owned by the Company and are installed in its customers' buildings. Each month the Company obtains readings from energy meters to determine the amount of energy produced for each customer. Its business is selling energy in the form of electricity, heat, hot water and cooling to its customers under long-term sales agreements. In the United Kingdom, it competes with Cogenco Limited, a subsidiary of Dalkia PLC, an alternative energy company with customers in the 50-500 kW range, ENER-G Holdings plc and Jenbacher, a subsidiary of General Electric Company. Other companies in the same market are Clarke Energy Ltd, EC Power Systems and Baxi-SenerTec UK. In Belgium, CHP equipment manufacturers are non-Belgian companies, including CogenGreen S.A., Capstone Turbine Corporation and Cummins Power Generation Inc., which are its primary competitors in the 50-500 kW range. In Spain, it competes with Baxi-SenerTec UK, MicroPower Europe, Guascor Power, Cummins Power Generation Inc., Icogen SA and Pasch y Cia SA. Icogen SA, based in Barcelona, is a Spanish supplier for systems below 500 kW. The Company is subject to extensive government regulation.
Executives
John W Rowe director
John Hatsopoulos director, officer: Co-Chief Executive Officer 85 FIRST AVENUE, WALTHAM MA 02451
Christine M Klaskin director 3 FORBES ROAD, LEXINGTON MA 02421
Locke M. Benjamin officer: Co-CEO 45 FIRST AVE, WALTHAM MA 02451
Deanna M Petersen director 45 FIRST AVENUE, WALTHAM MA 02451
Bonnie Jean Brown officer: CFO, Treasurer, and Secretary 97 FIFTY ACRE WAY, CARLISLE MA 01741
Charlest Maxwell director 6100 NORTH WESTERN AVE, OKLAHOMA CITY OK 73118
George N Hatsopoulos director, 10 percent owner BNN CORP, 150 CAMBRIDGEPARK DRIVE, CAMBRIDGE MA 02140
Earl R Lewis director C/O NXSTAGE MEDICAL INC. (NXTM), 439 SOUTH UNION STREET, 5TH FLOOR, LAWRENCE MA 01843
Alan D Weinstein director 45 FIRST AVENUE WALTHAM MA 02451

American DG Energy (American DG Energy) Headlines

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