As of today (2022-08-15), VOXX International's weighted average cost of capital is 8.74%. VOXX International's ROIC % is 1.24% (calculated using TTM income statement data).
VOXX International earns returns that do not match up to its cost of capital. It will destroy value as it grows.
VOXX International WACC % Historical Data
The historical data trend for VOXX International'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.
VOXX International Annual Data
Trend
Feb13
Feb14
Feb15
Feb16
Feb17
Feb18
Feb19
Feb20
Feb21
Feb22
WACC %
1.69
10.21
12.19
12.01
8.71
VOXX International Quarterly Data
Aug17
Nov17
Feb18
May18
Aug18
Nov18
Feb19
May19
Aug19
Nov19
Feb20
May20
Aug20
Nov20
Feb21
May21
Aug21
Nov21
Feb22
May22
WACC %
11.24
10.69
10.38
8.71
10.22
Competitive Comparison
For the Consumer Electronics subindustry, VOXX International'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.
VOXX International WACC % Distribution
For the Hardware industry and Technology sector, VOXX International's WACC % distribution charts can be found below:
* The bar in red indicates where VOXX International's WACC % falls into.
VOXX International 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, VOXX International's market capitalization (E) is $234.583 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 May. 2022, VOXX International's latest two-year average Short-Term Debt & Capital Lease Obligation was $1.453 Mil and its latest two-year average Long-Term Debt & Capital Lease Obligation was $11.504 Mil. The total Book Value of Debt (D) is $12.957 Mil.
a) weight of equity = E / (E + D) = 234.583 / (234.583 + 12.957) = 0.9477
b) weight of debt = D / (E + D) = 12.957 / (234.583 + 12.957) = 0.0523
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 2.79100000%. 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. VOXX International's beta is 0.90.
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 = 2.79100000% + 0.90 * 6% = 8.191%
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 Feb. 2022, VOXX International's interest expense (positive number) was $2.532 Mil. Its total Book Value of Debt (D) is $12.957 Mil.
Cost of Debt = 2.532 / 12.957 = 19.5416%.
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 4.585%.
VOXX International'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)
=
0.9477
*
8.191%
+
0.0523
*
19.5416%
*
(1 - 4.585%)
=
8.74%
* 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.
VOXX International (NAS:VOXX) 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, VOXX International's weighted average cost of capital is 8.74%. VOXX International's ROIC % is 1.24% (calculated using TTM income statement data).
VOXX International earns returns that do not match up to its cost of capital. It will destroy value as it grows.
VOXX International Corp is a manufacturer and supplier of consumer electronic products in the automotive, premium audio, and accessory industries. The company markets its products under the Audiovox brand name and other brand names and licensed brands. The company operates in three segments: Automotive Electronics, Consumer Electronics, and Biometrics. The company's product portfolio comprises rear-seat entertainment devices, satellite radio products, automotive security, digital TV tuners, mobile antennas, location-based services, high-end loudspeakers, digital living network alliance compatible devices, wireless and Bluetooth speakers, 360 Fly Action Cameras, reception and digital consumer products.
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