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RBC Bearings WACC %

:10.18% (As of Today)
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As of today (2021-12-09), RBC Bearings's weighted average cost of capital is 10.18%. RBC Bearings's ROIC % is 8.68% (calculated using TTM income statement data). RBC Bearings earns returns that do not match up to its cost of capital. It will destroy value as it grows.


RBC Bearings WACC % Historical Data

The historical data trend for RBC Bearings'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.

RBC Bearings Annual Data
Trend Mar12 Mar13 Mar14 Mar15 Mar16 Mar17 Mar18 Mar19 Mar20 Mar21
WACC %
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 11.16 10.66 8.92 7.30 10.21

RBC Bearings 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 6.94 8.93 10.21 9.71 10.02

Competitive Comparison

For the Tools & Accessories subindustry, RBC Bearings'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.

   

RBC Bearings WACC % Distribution

For the Industrial Products industry and Industrials sector, RBC Bearings's WACC % distribution charts can be found below:

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



RBC Bearings 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, RBC Bearings's market capitalization (E) is $6020.889 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, RBC Bearings's latest two-year average Short-Term Debt & Capital Lease Obligation was $10.2375 Mil and its latest two-year average Long-Term Debt & Capital Lease Obligation was $41.728 Mil. The total Book Value of Debt (D) is $51.9655 Mil.
a) weight of equity = E / (E + D) = 6020.889 / (6020.889 + 51.9655) = 0.9914
b) weight of debt = D / (E + D) = 51.9655 / (6020.889 + 51.9655) = 0.0086

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 1.43000000%. 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. RBC Bearings's beta is 1.47.
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 = 1.43000000% + 1.47 * 6% = 10.25%

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 Mar. 2021, RBC Bearings's interest expense (positive number) was $1.43 Mil. Its total Book Value of Debt (D) is $51.9655 Mil.
Cost of Debt = 1.43 / 51.9655 = 2.7518%.

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 18.395%.

RBC Bearings'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)
=0.9914*10.25%+0.0086*2.7518%*(1 - 18.395%)
=10.18%

* 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.


RBC Bearings  (NAS:ROLL) 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, RBC Bearings's weighted average cost of capital is 10.18%. RBC Bearings's ROIC % is 8.68% (calculated using TTM income statement data). RBC Bearings 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

RBC Bearings Business Description

RBC Bearings logo
Industry
Industrials » Industrial Products NAICS : 332991 SIC : 3562
Traded in Other Exchanges
Address
102 Willenbrock Road, One Tribology Center, Oxford, CT, USA, 06478
RBC Bearings Inc is a manufacturer and marketer of precision bearings and products used in aircraft and mechanical systems. The offering includes plain bearings, roller bearings, ball bearings, and engineered products. The products reduce wear in moving parts, facilitate proper power transmission, reduce damage and energy loss, and control pressure and flow. The primary customers for RBC Bearings are industrial markets and aerospace markets such as construction and mining, oil and natural resource extraction, heavy truck, marine, rail and train, packaging, commercial, private and military aircraft engines, and guided weaponry. The end market is the United States of America.
Executives
Feeney John J. officer: Vice President and Secretary ONE TRIBOLOGY CENTER 102 WILLENBROCK ROAD OXFORD CT 06478
Ennico Dolores J director RBC BEARINGS INCORPORATED ONE TRIBOLOGY CENTER OXFORD CT 06478
Hartnett Michael J director, officer: President and CEO RBC BEARINGS, INC., 102 WILLENBROCK ROAD ONE TRIBOLOGY CENTER OXFORD CT 06478
Edwards Richard J officer: V.P. and General Manager RBC BEARINGS INCORPORATED ONE TRIBOLOGY CENTER OXFORD CT 06478
Bannon Patrick S. officer: V.P. and General Manager 131 WOODS WAY DRIVE SOUTHBURY CT 06488
Bergeron Daniel A director, officer: VP, CFO and COO PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> Ownership Information: BERGERON DANIEL A 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;}
Sullivan Robert M officer: Corporate Controller 103 STILLWOLD DRIVE WETHERSFIELD CT 06109
Hawkins Ernest D officer: Vice President of Finance 102 WILLENBROCK ROAD OXFORD CT 06478
Crowell Richard R director AURORA CAPITAL PARTNERS LP 10877 WILSHIRE BOULEVARD SUITE 2100 LOS ANGELES CA 90024
Stewart Edward director 5715 EAST CHENEY DRIVE PARADISE VALLEY AZ 85253
Levine Alan B director PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> Ownership Information: LEVINE ALAN B 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;}
Faghri Amir director RBC BEARINGS INCORPORATED ONE TRIBOLOGY CENTER OXFORD CT 06478
Kaplan Steven H. director 11 LINDEN SHORES BRANFORD CT 06405
Ambrose Michael H. director ONE TRIBOLOGY CENTER 102 WILLENBROCK ROAD OXFORD CT 06478
Salamunovich Joseph officer: Vice President and Secretary AFTERMARKET TECHNOLOGY CORP 1400 OPUS PLACE SUITE 600 DOWNERS GROVE IL 60515

RBC Bearings Headlines

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