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AEP Industries (AEP Industries) WACC % :9.4% (As of May. 12, 2024)


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What is AEP Industries WACC %?

As of today (2024-05-12), AEP Industries's weighted average cost of capital is 9.4%%. AEP Industries's ROIC % is 0.00% (calculated using TTM income statement data). AEP Industries 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.


AEP Industries WACC % Historical Data

The historical data trend for AEP Industries'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.

AEP Industries WACC % Chart

AEP Industries Annual Data
Trend Oct07 Oct08 Oct09 Oct10 Oct11 Oct12 Oct13 Oct14 Oct15 Oct16
WACC %
Get a 7-Day Free Trial Premium Member Only Premium Member Only 8.13 8.97 7.38 6.08 3.68

AEP Industries Quarterly Data
Jan12 Apr12 Jul12 Oct12 Jan13 Apr13 Jul13 Oct13 Jan14 Apr14 Jul14 Oct14 Jan15 Apr15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16
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 6.08 5.17 3.99 2.66 3.68

Competitive Comparison of AEP Industries's WACC %

For the Auto Parts subindustry, AEP Industries'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.


AEP Industries's WACC % Distribution in the Vehicles & Parts Industry

For the Vehicles & Parts industry and Consumer Cyclical sector, AEP Industries's WACC % distribution charts can be found below:

* The bar in red indicates where AEP Industries's WACC % falls into.



AEP Industries 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, AEP Industries's market capitalization (E) is $562.260 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 Oct. 2016, AEP Industries's latest one-year quarterly average Book Value of Debt (D) is $196.5464 Mil.
a) weight of equity = E / (E + D) = 562.260 / (562.260 + 196.5464) = 0.741
b) weight of debt = D / (E + D) = 196.5464 / (562.260 + 196.5464) = 0.259

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. AEP Industries'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 Oct. 2016, AEP Industries's interest expense (positive number) was $19.882 Mil. Its total Book Value of Debt (D) is $196.5464 Mil.
Cost of Debt = 19.882 / 196.5464 = 10.1157%.

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 = 17.72 / 46.522 = 38.09%.

AEP Industries'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)
=0.741*10.5%+0.259*10.1157%*(1 - 38.09%)
=9.4%

* 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.


AEP Industries  (NAS:AEPI) 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, AEP Industries's weighted average cost of capital is 9.4%%. AEP Industries's ROIC % is 0.00% (calculated using TTM income statement data). AEP Industries 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

AEP Industries (AEP Industries) Business Description

Traded in Other Exchanges
N/A
Address
AEP Industries Inc was founded in 1970 and incorporated in Delaware in 1985. The Company is a manufacturer of plastic packaging films in North America. It manufactures and markets a diverse line of polyethylene, polyvinyl chloride and polypropylene flexible packaging products, with consumer, industrial and agricultural applications. The Company's plastic packaging films are used in the packaging, transportation, beverage, food, automotive, pharmaceutical, chemical, electronics, constructions, agriculture and textile industries. It manufactures plastic films, mainly from resins blended with other raw materials, which it either sell or further process by printing, laminating, slitting or converting. The Company's processing technologies enable it to create a variety of value-added products according to the specifications of its customers. Its manufacturing operations are located in the United States and Canada. It manufactures both industrial grade products, which are manufactured to general industry specifications, and specialty products, which are manufactured under more exacting standards to assure certain required chemical and physical properties. Specialty products generally sell at higher margins than industrial grade products. It manufactures custom films, generally for industrial applications, including sheeting, tubing and bags. The Company manufactures a line of stretch film products for both hand wrap and rotary applications, using both monolayer and co-extruded constructions used to wrap pallets of industrial and commercial goods for shipping or storage. The Company manufacture specifically formulated in-store and pre-store films with its Resinite line of polyvinyl chloride food wrap for the supermarket and industrial markets. It offers product with approximately 50 different formulations. Its Griffin, Georgia facility also produces dispenser (ZipSafe cutter) boxes containing polyvinyl chloride food wrap for sale to consumers and institutions, including restaurants, schools, hospitals and penitentiaries. The Company's PROformance films are used for food, pharmaceutical and medical applications and are available in up to five layers for applications requiring strength, clarity, sealability, barrier properties against oxygen or moisture transmission, and breathability for preserving freshness. Its canliners product line includes retail kitchen and standard trash bags and others. The Company manufactures approximately ten color printing, sheeting, and wicketed bags. It's printed and converted films provide printed rollstock to the food and beverage industries and other manufacturing and distributing companies. It also converts printed rollstock to bags and pouches for use by bakeries, fresh or frozen food processors, manufacturers or other dry goods processors. The Company's operations are conducted within one business segment-the production, manufacture and distribution of flexible plastic packaging products, for the food
Executives
Lee C Stewart director PO BOX 816, SHARON CT 06069
Daniel Khoshaba 10 percent owner 67 EAST PARK PLACE, 8TH FLOOR, SUITE 800, MORRISTOWN NJ 07960
Jmb Capital Partners Master Fund L.p. 10 percent owner 1999 AVENUE OF THE STARS, SUITE 2040, LOS ANGELES CA 90067
Jonathan Brooks 10 percent owner 2201 NORTH BEVERLY DR., BEVERLY HILLS CA 90210
Smithwood Partners Llc 10 percent owner 1999 AVENUE OF THE STARS, SUITE 2040, LOS ANGELES CA 90067
Smithwood General Partner, Llc 10 percent owner 1999 AVENUE OF THE STARS, SUITE 2040, LOS ANGELES CA 90067-6022
Smithwood Advisers, L.p. 10 percent owner 1999 AVENUE OF THE STARS, SUITE 2040, LOS ANGELES CA 90067-6022
Third Point Llc 10 percent owner 55 HUDSON YARDS, NEW YORK NY 10001
Daniel S Loeb 10 percent owner THIRD POINT LLC, 390 PARK AVENUE, NEW YORK NY 10022
Bradley Louis Radoff other: See Remarks Below 2727 KIRBY DRIVE, UNIT 29L, HOUSTON TX 77098
Matthew Constantino other: Former Director (1) 120 FIFTH AVENUE, 3RD FLOOR, NEW YORK NY 10011
Eric Press other: Former Director (1) 1301 AVENUE OF THE AMERICA 38TH FLOOR, NEW YORK NY 10019
Apollo Investment Fund V Lp 10 percent owner 2 MANHATTANVILLE RD, C/O APOLLO ADVISORS LP, PURCHASE NY 10577
Apollo Advisors V Lp 10 percent owner 2 MANHATTANVILLE RD, C/O APOLLO ADVISORS LP, PURCHASE NY 10577
Apollo Management V Lp 10 percent owner 2 MANHATTANVILLE RD, C/O APOLLO ADVISORS LP, PURCHASE NY 10577

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