>
Switch to:

Emeco Holdings WACC %

:9.44% (As of Today)
View and export this data going back to 2013. Start your Free Trial

As of today (2021-10-22), Emeco Holdings's weighted average cost of capital is 9.44%. Emeco Holdings's ROIC % is 9.40% (calculated using TTM income statement data). Emeco Holdings earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Emeco Holdings WACC % Historical Data

The historical data trend for Emeco Holdings'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.

Emeco Holdings Annual Data
Trend Jun12 Jun13 Jun14 Jun15 Jun16 Jun17 Jun18 Jun19 Jun20 Jun21
WACC %
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 9.11 4.47 2.27 12.11 17.47

Emeco Holdings Semi-Annual Data
Dec11 Jun12 Dec12 Jun13 Dec13 Jun14 Dec14 Jun15 Dec15 Jun16 Dec16 Jun17 Dec17 Jun18 Dec18 Jun19 Dec19 Jun20 Dec20 Jun21
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 2.27 - 12.11 - 17.47

Competitive Comparison

For the Rental & Leasing Services subindustry, Emeco Holdings'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.

   

Emeco Holdings WACC % Distribution

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

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



Emeco Holdings 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, Emeco Holdings's market capitalization (E) is $461.165 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 Jun. 2021, Emeco Holdings's latest two-year average Short-Term Debt & Capital Lease Obligation was $47.560175160345 Mil and its latest two-year average Long-Term Debt & Capital Lease Obligation was $280.76256086133 Mil. The total Book Value of Debt (D) is $328.32273602168 Mil.
a) weight of equity = E / (E + D) = 461.165 / (461.165 + 328.32273602168) = 0.5841
b) weight of debt = D / (E + D) = 328.32273602168 / (461.165 + 328.32273602168) = 0.4159

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 1.26000000%. 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. Emeco Holdings's beta is 0.17.
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 = 1.26000000% + 0.17 * 6% = 2.28%

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 Jun. 2021, Emeco Holdings's interest expense (positive number) was $67.488532110092 Mil. Its total Book Value of Debt (D) is $328.32273602168 Mil.
Cost of Debt = 67.488532110092 / 328.32273602168 = 20.5555%.

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 5.12%.

Emeco Holdings'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)
=0.5841*2.28%+0.4159*20.5555%*(1 - 5.12%)
=9.44%

* 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.


Emeco Holdings  (OTCPK:EOHDF) 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, Emeco Holdings's weighted average cost of capital is 9.44%. Emeco Holdings's ROIC % is 9.40% (calculated using TTM income statement data). Emeco Holdings 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

Emeco Holdings Business Description

Emeco Holdings logo
Industry
Traded in Other Exchanges
Address
Level 3, 71 Walters Drive, Osborne Park, Perth, WA, AUS, 6017
Emeco Holdings Ltd owns and operates a fleet of original equipment manufacturer machines to deliver equipment rental solutions. Its reportable segments are Australian Rental that provides a wide range of earthmoving equipment to customers in Australia, Australian Workshops which is engaged in providing maintenance services to customers in Australia and Pit N Portal which provides a range of mining services solutions and associated services to customers in Australia.. The company generates a majority of its revenue from the Australian Rental Segment. Geographically, it generates a majority of its revenue from Australia.

Emeco Holdings Headlines

No Headlines

Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)