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Kirkland's WACC %

:8.72% (As of Today)
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As of today (2021-10-26), Kirkland's's weighted average cost of capital is 8.72%. Kirkland's's ROIC % is 13.56% (calculated using TTM income statement data). Kirkland's 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.


Kirkland's WACC % Historical Data

The historical data trend for Kirkland's'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.

Kirkland's Annual Data
Trend Jan12 Jan13 Jan14 Jan15 Jan16 Jan17 Jan18 Jan19 Jan20 Jan21
WACC %
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 12.15 9.58 6.30 0.42 9.09

Kirkland's Quarterly Data
Oct16 Jan17 Apr17 Jul17 Oct17 Jan18 Apr18 Jul18 Oct18 Jan19 Apr19 Jul19 Oct19 Jan20 Apr20 Jul20 Oct20 Jan21 Apr21 Jul21
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 2.93 4.76 9.09 9.39 7.73

Competitive Comparison

For the Specialty Retail subindustry, Kirkland's'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.

   

Kirkland's WACC % Distribution

For the Retail - Cyclical industry and Consumer Cyclical sector, Kirkland's's WACC % distribution charts can be found below:

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



Kirkland's 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, Kirkland's's market capitalization (E) is $313.469 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 Jul. 2021, Kirkland's's latest two-year average Short-Term Debt & Capital Lease Obligation was $49.0635 Mil and its latest two-year average Long-Term Debt & Capital Lease Obligation was $172.356 Mil. The total Book Value of Debt (D) is $221.4195 Mil.
a) weight of equity = E / (E + D) = 313.469 / (313.469 + 221.4195) = 0.586
b) weight of debt = D / (E + D) = 221.4195 / (313.469 + 221.4195) = 0.414

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 1.68000000%. 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. Kirkland's's beta is 2.17.
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 = 1.68000000% + 2.17 * 6% = 14.7%

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 Jan. 2021, Kirkland's's interest expense (positive number) was $0.571 Mil. Its total Book Value of Debt (D) is $221.4195 Mil.
Cost of Debt = 0.571 / 221.4195 = 0.2579%.

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 less than 0%, and it's set to 0%.

Kirkland's'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)
=0.586*14.7%+0.414*0.2579%*(1 - 0%)
=8.72%

* 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.


Kirkland's  (NAS:KIRK) 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, Kirkland's's weighted average cost of capital is 8.72%. Kirkland's's ROIC % is 13.56% (calculated using TTM income statement data). Kirkland's 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

Kirkland's Business Description

Kirkland's logo
Industry
Consumer Cyclical » Retail - Cyclical NAICS : 442299 SIC : 5999
Traded in Other Exchanges
Address
5310 Maryland Way, Brentwood, TN, USA, 37027
Kirkland's Inc is a specialty retailer of home decor and gifts in the United States. Its stores provide various merchandise, including holiday decor, framed arts, furniture, ornamental wall decor, fragrance and accessories, mirrors, lamps, decorative accessories, textiles, housewares, gifts, artificial floral products, frames, clocks, and outdoor living items. Its stores also offer an assortment of holiday merchandise in seasonal periods, as well as items that are suitable for gift-giving.
Executives
Martin Jeffrey T. officer: Sr. VP of Omni-Channel Retail 5310 MARYLAND WAY BRENTWOOD TN 37027
Collins Steven J director 29 VINTON STREET, #5 BOSTON MA 02127
Woodward Steven C director, officer: President and CEO 550 BAILEY AVENUE FORT WORTH TX 76107
Strain Nicole Allyson officer: Chief Financial Officer 5310 MARYLAND WAY BRENTWOOD TN 37027
Pleas Charles Iii director 123 S. FRONT STREET DEPT. 8074 MEMPHIS TN 38103
Lanigan Susan S director 100 MISSION RIDGE GOODLETTSVILLE TN 37072
Cairnes Mike officer: President and COO 5310 MARYLAND WAY BRENTWOOD TN 37027
Sandfort Gregory A director TRACTOR SUPPLY COMPANY 5401 VIRGINIA WAY BRENTWOOD TN 37027
Spain Murray director C/O B&M LEASING 283 2ND STREET PIKE SUITE 110 SOUTHAMPTON PA 18966
Parks Ralph T director 451 INDUSTRIAL LANE BIRMINGHAM AL 35211
Global Private Equity Ii Limited Partnership other: Member of Group > 10% C/O ADVENT INTERNATIONAL CORP 75 STATE ST 29TH FLOOR BOSTON MA 02104
Advent Direct Investment Program Limited Partnership other: Member of Group > 10% C/O ADVENT INTERNATIONAL CORP 75 STATE ST 29TH FLOOR BOSTON MA 02104
Advent Partners Limited Partnership other: Member of Group > 10% C/O ADVENT INTERNATIONAL CORP 75 STATE ST 29TH FLOOR BOSTON MA 02104
Advent International Limited Partnership other: Member of Group > 10% C/O ADVENT INTERNATIONAL CORP 75 STATE ST 29TH FLOOR BOSTON MA 02104
Advent International Corp/ma other: Member of Group > 10% 800 BOYLSTON STREET SUITE 3300 BOSTON MA 02199

Kirkland's Headlines

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