As of today (2024-06-08), Stewart Enterprises,'s weighted average cost of capital is 9.27%%. Stewart Enterprises,'s ROIC % is 0.00% (calculated using TTM income statement data).
Stewart Enterprises, 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.
* 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.
Competitive Comparison of Stewart Enterprises,'s WACC %
For the Personal Services subindustry, Stewart Enterprises,'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.
Stewart Enterprises,'s WACC % Distribution in the Personal Services Industry
For the Personal Services industry and Consumer Cyclical sector, Stewart Enterprises,'s WACC % distribution charts can be found below:
* The bar in red indicates where Stewart Enterprises,'s WACC % falls into.
Stewart Enterprises, 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, Stewart Enterprises,'s market capitalization (E) is €826.502 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. 2013, Stewart Enterprises,'s latest one-year quarterly average Book Value of Debt (D) is €245.4884 Mil.
a) weight of equity = E / (E + D) = 826.502 / (826.502 + 245.4884) = 0.771
b) weight of debt = D / (E + D) = 245.4884 / (826.502 + 245.4884) = 0.229
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 4.434%. 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. Stewart Enterprises,'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 = 4.434% + 1 * 6% = 10.434%
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. 2013, Stewart Enterprises,'s interest expense (positive number) was €17.988 Mil. Its total Book Value of Debt (D) is €245.4884 Mil.
Cost of Debt = 17.988 / 245.4884 = 7.3274%.
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 = 11.297 / 42.301 = 26.71%.
Stewart Enterprises,'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)
=
0.771
*
10.434%
+
0.229
*
7.3274%
*
(1 - 26.71%)
=
9.27%
* 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.
Stewart Enterprises, (FRA:SWX) 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, Stewart Enterprises,'s weighted average cost of capital is 9.27%%. Stewart Enterprises,'s ROIC % is 0.00% (calculated using TTM income statement data).
Stewart Enterprises, 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
Stewart Enterprises, (FRA:SWX) Business Description
Stewart Enterprises, Inc. was founded in 1910, and was incorporated as a Louisiana corporation in 1970 in the State of Louisiana. The Company is a provider of funeral and cemetery products and services in the death care industry in the United States. It owns and operates approximately 217 funeral homes and 141 cemeteries in 24 states within the United States and Puerto Rico. It sells cemetery property and funeral and cemetery products and services both at the time of need and on a preneed basis. The Company's funeral homes offer a complete range of funeral and cremation services and products both at the time of need and on a preneed basis. The Company's services and products include family consultation, removal and preparation of remains, the use of funeral home facilities for visitation, worship and funeral services, transportation services, flowers and caskets. Most of its funeral homes have a non-denominational chapel on the premises, which allows family visitation and religious services to take place at the same location. The Company's cemetery operations sell cemetery property and related merchandise, including lots, lawn crypts, family and community mausoleums, monuments, markers and burial vaults, and also provide burial site openings and closings and inscriptions. It also provides cremation memorialization options including columbariums, cremation niches and cremation gardens. Cemetery property and merchandise sales are made both at the time of need and on a preneed basis. The Company's funeral home and cemetery operations face competition in local markets that are served by numerous funeral home and cemetery firms. It also competes with monument dealers, casket retailers, low-cost funeral providers and crematories, and other non-traditional providers of services or products.
Quick Browse
Personalize
Premium Gurus 
Create New Portfolio
Portfolio Contest
FRA:SWX has been successfully added to your 