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FATBB (FAT Brands) WACC % :9.72% (As of Dec. 15, 2024)


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What is FAT Brands WACC %?

As of today (2024-12-15), FAT Brands's weighted average cost of capital is 9.72%%. FAT Brands's ROIC % is -0.82% (calculated using TTM income statement data). FAT Brands earns returns that do not match up to its cost of capital. It will destroy value as it grows.

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


FAT Brands WACC % Historical Data

The historical data trend for FAT Brands'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.

FAT Brands WACC % Chart

FAT Brands Annual Data
Trend Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23
WACC %
Get a 7-Day Free Trial Premium Member Only 16.24 12.47 9.44 9.66 9.35

FAT Brands Quarterly Data
Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23 Mar24 Jun24 Sep24
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 9.98 9.35 9.45 9.63 9.70

Competitive Comparison of FAT Brands's WACC %

For the Restaurants subindustry, FAT Brands'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.


FAT Brands's WACC % Distribution in the Restaurants Industry

For the Restaurants industry and Consumer Cyclical sector, FAT Brands's WACC % distribution charts can be found below:

* The bar in red indicates where FAT Brands's WACC % falls into.



FAT Brands 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, FAT Brands's market capitalization (E) is $92.974 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 Sep. 2024, FAT Brands's latest one-year quarterly average Book Value of Debt (D) is $1388.7148 Mil.
a) weight of equity = E / (E + D) = 92.974 / (92.974 + 1388.7148) = 0.0627
b) weight of debt = D / (E + D) = 1388.7148 / (92.974 + 1388.7148) = 0.9373

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 4.395%. 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. FAT Brands's beta is 1.06.
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 = 4.395% + 1.06 * 6% = 10.755%

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 Sep. 2024, FAT Brands's interest expense (positive number) was $136.914 Mil. Its total Book Value of Debt (D) is $1388.7148 Mil.
Cost of Debt = 136.914 / 1388.7148 = 9.859%.

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 = -3.259 / -151.926 = 2.15%.

FAT Brands'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)
=0.0627*10.755%+0.9373*9.859%*(1 - 2.15%)
=9.72%

* 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.


FAT Brands  (NAS:FATBB) 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, FAT Brands's weighted average cost of capital is 9.72%%. FAT Brands's ROIC % is -0.82% (calculated using TTM income statement data). FAT Brands earns returns that do not match up to its cost of capital. It will destroy value as it grows.


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

FAT Brands Business Description

Traded in Other Exchanges
Address
9720 Wilshire Boulevard, Suite 500, Beverly Hills, CA, USA, 90212
FAT Brands Inc is a multi-brand restaurant franchising company. It develops, markets, acquires and manages quick service, fast casual, casual dining, and polished casual dining restaurant concepts around the world. The company operates as a franchisor of restaurants, where the company generally does not own or operate the restaurant locations but rather generates revenue by charging franchisees an initial franchise fee as well as ongoing royalties. For some of the company's brands, it also directly owns and operates restaurant locations. Its brands include Round Table Pizza, Fatburger, Johnny Rockets, Twin Peaks, and Elevation Burger among others. Geographically, the majority of the revenue for the company is generated from the United States and the rest from other countries.
Executives
Lynne Leigh Collier director 8523 FOREST HILLS BLVD, DALLAS TX 75218
Allen Sussman officer: General Counsel 9720 WILSHIRE BLVD., SUITE 500, BEVERLY HILLS CA 90212
Robert Rosen officer: EVP Capital Markets
Amy Valentine Forrestal director 6330 MOUNTAIN BROOK LANE, ATLANTA GA 30328
Kenneth Jeffery Anderson director 11150 SANTA MONICA BLVD, STE 400, LOS ANGELES CA 90025
Rachel Serruya 10 percent owner 1179 KATELLA STREET, LAGUNA BEACH CA 92651
Hot Gfg Llc 10 percent owner 210 SHIELDS COURT, MARKHAM A6 L3R 8V2
Kenneth J. Kuick officer: Chief Financial Officer 520 ZANG ST., UNIT D, BROOMFIELD CO 80021
Taylor Andrew Wiederhorn officer: Chief Development Officer 9720 WILSHIRE BLVD,, SUITE 500, BEVERLY HILLS CA 90212
Thayer Donald Wiederhorn officer: Chief Marketing Officer 9720 WILSHIRE BLVD,, SUITE 500, BEVERLY HILLS CA 90212
Fog Cutter Holdings, Llc 10 percent owner 9720 WILSHIRE BLVD, SUITE 500, BEVERLY HILLS CA 90212
Rebecca D Hershinger officer: CHIEF FINANCIAL OFFICER C/O GENIUS BRANDS INTERNATIONAL, INC., 9401 WILSHIRE BLVD. #608, BEVERLY HILLS CA 90212
Toni Mario Bianco officer: PRESIDENT / COO - FATBURGER 4029 BALLARD WOODS DRIVE, SMITHFILED KY 40068
Fog Cutter Capital Group Inc 10 percent owner 1310 S W 17TH ST, PORTLAND OR 97201
Silvia Kessel director METROMEDIA CO, ONE MEADOWLANDS PLAZA, EAST RUTHERFORD NJ 07073