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Huron Consulting Group WACC %

:6.41% (As of Today)
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As of today (2021-11-29), Huron Consulting Group's weighted average cost of capital is 6.41%. Huron Consulting Group's ROIC % is 5.32% (calculated using TTM income statement data). Huron Consulting Group earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Huron Consulting Group WACC % Historical Data

The historical data trend for Huron Consulting Group'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.

Huron Consulting Group Annual Data
Trend Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20
WACC %
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 0.99 1.16 5.43 3.09 5.45

Huron Consulting Group Quarterly Data
Dec16 Mar17 Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21
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 4.46 5.45 6.12 5.89 5.64

Competitive Comparison

For the Consulting Services subindustry, Huron Consulting Group'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.

   

Huron Consulting Group WACC % Distribution

For the Business Services industry and Industrials sector, Huron Consulting Group's WACC % distribution charts can be found below:

* The bar in red indicates where Huron Consulting Group's WACC % falls into.



Huron Consulting Group 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, Huron Consulting Group's market capitalization (E) is $1042.839 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 Sep. 2021, Huron Consulting Group's latest two-year average Short-Term Debt & Capital Lease Obligation was $8.634 Mil and its latest two-year average Long-Term Debt & Capital Lease Obligation was $271.081 Mil. The total Book Value of Debt (D) is $279.715 Mil.
a) weight of equity = E / (E + D) = 1042.839 / (1042.839 + 279.715) = 0.7885
b) weight of debt = D / (E + D) = 279.715 / (1042.839 + 279.715) = 0.2115

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 1.64000000%. 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. Huron Consulting Group's beta is 0.97.
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 = 1.64000000% + 0.97 * 6% = 7.46%

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. 2020, Huron Consulting Group's interest expense (positive number) was $9.292 Mil. Its total Book Value of Debt (D) is $279.715 Mil.
Cost of Debt = 9.292 / 279.715 = 3.322%.

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 25.005%.

Huron Consulting Group'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)
=0.7885*7.46%+0.2115*3.322%*(1 - 25.005%)
=6.41%

* 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.


Huron Consulting Group  (NAS:HURN) 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, Huron Consulting Group's weighted average cost of capital is 6.41%. Huron Consulting Group's ROIC % is 5.32% (calculated using TTM income statement data). Huron Consulting Group 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 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

Huron Consulting Group Business Description

Huron Consulting Group logo
Industry
Industrials » Business Services NAICS : 541611 SIC : 8742
Traded in Other Exchanges
Address
550 West Van Buren Street, Chicago, IL, USA, 60607
Huron Consulting Group Inc is a professional services firm. The company provides expertise in strategy, technology, operations, advisory services, & analytics through three operating segments namely Healthcare, Education, and Business Advisory. Healthcare segment helps the firms to transform and innovate the delivery model to focus on patient wellness by improving quality outcomes, minimizing care variation and fundamentally improving patient and population health, Education segment provides management consulting and technology solutions, and Business Advisory segment provides services to large and middle-market organizations, not-for-profit organizations, and private equity firms. It generates a majority of its revenue from the Healthcare Segment.
Executives
Zumwalt Debra director 149 COMMONWEALTH DRIVE MENLO PARK CA 94025
Roth James H director, officer: CEO HURON CONSULTING GROUP 550 WEST VAN BUREN STREET CHICAGO IL 60607
Hussey C. Mark officer: President and COO 550 WEST VAN BUREN STREET CHICAGO IL 60607
Mccartney John director US ROBOTICS INC 8100 MCCORMICK BLVD SKOKIE IL 60076
Featherstone Kyle officer: Controller 550 W. VAN BUREN 17TH FLOOR CHICAGO IL 60607
Lockhart H Eugene director OAK HILL FARM, P.O. BOX 489 4125 LOUISA ROAD KESWICK VA 22947
Sawyer Hugh E Iii director 1806 BALLY BUNION DRIVE DECATUR GA 30097
Singh-bushell Ekta director 9197 S. PEORIA ST. ENGLEWOOD CO 80112
Torain Ernest W. Jr. officer: EVP, Gen. Counsel & Corp.Sec. 550 W. VAN BUREN 17TH FLOOR CHICAGO IL 60607
Massaro George director PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> Ownership Information: MASSARO GEORGE 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;}
Kelly John D. officer: EVP, CFO and Treasurer 555 WEST VAN BUREN STREET CHICAGO IL 60607
Wong Ellen officer: Chief Accounting Officer 550 WEST VAN BUREN STREET CHICAGO IL 60607
Ratekin Diane E. officer: EVP, Gen. Counsel, & Corp.Sec. 550 WEST VAN BUREN STREET CHICAGO IL 60607
Moody John S director MARSH MCLENNAN REALTY ADVISORS 1166 AVENUE OF THE AMERICAS NEW YORK NY 10036
Edwards James D director PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> Ownership Information: EDWARDS JAMES D 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;}

Huron Consulting Group Headlines

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