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Alpha Pro Tech WACC %

:-6.28% (As of Today)
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As of today (2022-07-04), Alpha Pro Tech's weighted average cost of capital is -6.28%. Alpha Pro Tech's ROIC % is 8.70% (calculated using TTM income statement data). Alpha Pro Tech generates higher returns on investment than it costs the company to raise the capital needed for that investment. It 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.


Alpha Pro Tech WACC % Historical Data

The historical data trend for Alpha Pro Tech'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.

Alpha Pro Tech Annual Data
Trend Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21
WACC %
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 9.82 7.39 3.44 -8.37 -11.81

Alpha Pro Tech Quarterly Data
Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22
WACC % 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 Premium Member Only Premium Member Only Premium Member Only -9.41 -9.77 -9.12 -11.81 -8.87

Competitive Comparison

For the Building Products & Equipment subindustry, Alpha Pro Tech'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.

   

Alpha Pro Tech WACC % Distribution

For the Construction industry and Industrials sector, Alpha Pro Tech's WACC % distribution charts can be found below:

* The bar in red indicates where Alpha Pro Tech's WACC % falls into.



Alpha Pro Tech 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, Alpha Pro Tech's market capitalization (E) is $57.714 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 two-year average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together. As of Mar. 2022, Alpha Pro Tech's latest two-year average Short-Term Debt & Capital Lease Obligation was $0.875 Mil and its latest two-year average Long-Term Debt & Capital Lease Obligation was $2.268 Mil. The total Book Value of Debt (D) is $3.143 Mil.
a) weight of equity = E / (E + D) = 57.714 / (57.714 + 3.143) = 0.9484
b) weight of debt = D / (E + D) = 3.143 / (57.714 + 3.143) = 0.0516

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 2.91857143%. 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. Alpha Pro Tech's beta is -1.59.
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 = 2.91857143% + -1.59 * 6% = -6.6214%

3. Cost of Debt:
GuruFocus uses last fiscal year end Interest Expense divided by the latest two-year average debt to get the simplified cost of debt.
As of Dec. 2021, Alpha Pro Tech's interest expense (positive number) was $0 Mil. Its total Book Value of Debt (D) is $3.143 Mil.
Cost of Debt = 0 / 3.143 = 0%.

4. Multiply by one minus Average Tax Rate:
GuruFocus uses the latest two-year average tax rate to do the calculation. The calculated average tax rate is limited to between 0% and 100%. If the calculated average tax rate is higher than 100%, it is set to 100%. If the calculated average tax rate is less than 0%, it is set to 0%.
The latest Two-year Average Tax Rate is 18.57%.

Alpha Pro Tech'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)
=0.9484*-6.6214%+0.0516*0%*(1 - 18.57%)
=-6.28%

* 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.


Alpha Pro Tech  (AMEX:APT) 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, Alpha Pro Tech's weighted average cost of capital is -6.28%. Alpha Pro Tech's ROIC % is 8.70% (calculated using TTM income statement data). Alpha Pro Tech generates higher returns on investment than it costs the company to raise the capital needed for that investment. It 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.


Be Aware

1. GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding latest two-year average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together.

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 last fiscal year end Interest Expense divided by the latest two-year average debt to get the simplified cost of debt.


Related Terms

Alpha Pro Tech Business Description

Alpha Pro Tech logo
Industry
Industrials » Construction NAICS : 327120 SIC : 3255
Traded in Other Exchanges
Address
60 Centurian Drive, Suite 112, Markham, ON, CAN, L3R 9R2
Alpha Pro Tech Ltd is involved in the business of developing, manufacturing, and marketing of disposable protective apparel, building supply, and infection control products principally in the United States. It operates its business through segment which includes Building Supply and Disposable Protective Apparel. It mainly offers a line of construction supply weatherization products, namely house wrap and synthetic roof underlayment as well as other woven material, different styles of disposable products like shoe covers, bouffant caps, gowns, coveralls, lab coats, frocks and other miscellaneous products. It also provides face masks and eye shields. It generates most of its revenues from the sale of products across the United States.
Executives
Manock Russell director C/O ALPHA PRO TECH LTD 60 CENTURIAN DR MARKHAM CANADA A6 9999999999
Ritota John director C/O ALPHA PRO TECH LTD 60 CENTURIAN DR STE 112 MARKHAM ONTARIO CANADA A1 L3R9R2
Montgomery Charles D director 60 CENTURIAN DRIVE SUITE#112 MARKHAM A6 L3R 9R2
Buchan James director 60 CENTURIAN DRIVE SUITE 112 MARKHAM A6 L3R9R2
Hoffman Lloyd officer: CEO C/O ALPHA PRO TECH LTD 60 CENTURIAN DRIVE STE 112 MARKHAM ONTARIO CANADA A1 L3R9R2
Garcia David R director 60 CENTURIAN DRIVE SUITE 112 MARKHAM A6 L3R9R2
Mcdonald Colleen J officer: CFO 60 CENTURIAN DRIVE SUITE 112 MARKHAM A6 L3R 9R2
Millar Donna director 60 CENTURIAN DRIVE SUITE 112 MARKHAM A6 L3R 9R2
Anderson David B director 60 CENTURIAN DRIVE SUITE # 112 MARKHAM A6 L3R 9R2
Millar Al director, officer: President C/O ALPHA PRO TECH LTD 60 CENTURIAN DRIVE STE 112 MARKHAM ONTARIO CANADA A1 L3R9R2
Hoffman Sheldon director, officer: C.E.O. 60 ENTURIAN DRIVE STE 112 C/O ALPHA PRO TECH LTD MARKHAM ONTAIRO CANADA A6 0000
Isaly Robert director PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> Ownership Information: ISALY ROBERT a.header:link {color: #3b4fae; font-weight: bold; text-decoration: underline;} a.header:visited {color: #3b4fae; font-weight: bold; text-decoration: underline;} a.header:hover {color: #191970;}
Michael Scheerer officer: Sr VP- Sales & marketing 60 CENTURIAN DRIVE STE 112 C/O ALPHA PRO TECH LTD MARKHAM ONTARIO CANA A6 0000
Bennett Donald director PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> Ownership Information: BENNETT DONALD a.header:link {color: #3b4fae; font-weight: bold; text-decoration: underline;} a.header:visited {color: #3b4fae; font-weight: bold; text-decoration: underline;} a.header:hover {color: #191970;}

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