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Willamette Valley Vineyards (NAS:WVVI) WACC %

:6.81% (As of Today)
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As of today (2022-11-29), Willamette Valley Vineyards's weighted average cost of capital is 6.81%. Willamette Valley Vineyards's ROIC % is -1.73% (calculated using TTM income statement data). Willamette Valley Vineyards earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Willamette Valley Vineyards (NAS:WVVI) WACC % Historical Data

The historical data trend for Willamette Valley Vineyards'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.

Willamette Valley Vineyards Annual Data
Trend Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21
WACC % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 6.09 3.74 3.58 5.30 7.26

Willamette Valley Vineyards Quarterly Data
Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22
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 7.43 7.26 7.47 7.07 7.09

Willamette Valley Vineyards (NAS:WVVI) WACC % Competitive Comparison

For the Beverages - Wineries & Distilleries subindustry, Willamette Valley Vineyards'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.

   

Willamette Valley Vineyards (NAS:WVVI) WACC % Distribution

For the Beverages - Alcoholic industry and Consumer Defensive sector, Willamette Valley Vineyards's WACC % distribution charts can be found below:

* The bar in red indicates where Willamette Valley Vineyards's WACC % falls into.



Willamette Valley Vineyards 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, Willamette Valley Vineyards's market capitalization (E) is $30.155 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. 2022, Willamette Valley Vineyards's latest two-year average Short-Term Debt & Capital Lease Obligation was $2.1615 Mil and its latest two-year average Long-Term Debt & Capital Lease Obligation was $10.4995 Mil. The total Book Value of Debt (D) is $12.661 Mil.
a) weight of equity = E / (E + D) = 30.155 / (30.155 + 12.661) = 0.7043
b) weight of debt = D / (E + D) = 12.661 / (30.155 + 12.661) = 0.2957

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 3.71300000%. 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. Willamette Valley Vineyards's beta is 0.84.
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 = 3.71300000% + 0.84 * 6% = 8.753%

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. 2021, Willamette Valley Vineyards's interest expense (positive number) was $0.391 Mil. Its total Book Value of Debt (D) is $12.661 Mil.
Cost of Debt = 0.391 / 12.661 = 3.0882%.

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 29.18%.

Willamette Valley Vineyards'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)
=0.7043*8.753%+0.2957*3.0882%*(1 - 29.18%)
=6.81%

* 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.


Willamette Valley Vineyards  (NAS:WVVI) 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, Willamette Valley Vineyards's weighted average cost of capital is 6.81%. Willamette Valley Vineyards's ROIC % is -1.73% (calculated using TTM income statement data). Willamette Valley Vineyards 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

Willamette Valley Vineyards (NAS:WVVI) Business Description

Willamette Valley Vineyards logo
Traded in Other Exchanges
Address
8800 Enchanted Way, South East, Turner, OR, USA, 97392
Willamette Valley Vineyards Inc produces and sells premium, super-premium, and ultra-premium varietals. The grapes are harvested, fermented, and made into wine at the company's Turner winery, and the wines are sold principally under its Willamette Valley Vineyards label and also under the Griffin Creek, Tualatin Estate, Pambrun, Maison Bleue, Natoma, Metis, and Elton labels. It operates under two operating segments, direct sales and distributor sales. Direct sales include retail sales in its tasting room and remote sites, wine club sales, online sales, on-site events, kitchen and catering sales, and other sales made directly to the consumer without the use of an intermediary. Distributor sales include all sales through a third party where prices are given at a wholesale rate.
Executives
Ferry John Alphonsus officer: CFO 15830 FOREST RIDGE LANE NE SILVERTON OR 97381
Copland Leslie J director 2350 NW SAVIER STREET UNIT 406 PORTLAND OR 97210
Westing Heather director 25030 SW PARKWAY AVE SUITE 300 WILSONVILLE OR 97070
Ricci Jonathan J director C/O JONES SODA CO., 234 9TH AVE. N. SEATTLE WA 98109
Smith Craig Alan director 367 SANRODEE DR. SE SALEM OR 97317
Bernau James W director, 10 percent owner, officer: Chief Executive Officer 2545 CLOVERDALE RD SE TURNER OR 97392
Sarles Christopher L director 2185 SW WINCHESTER PORTLAND OR 97225-4457
Ellis James L director 7850 SE KING ROAD MILWAUKIE OR 97222
Riccardi Chris 10 percent owner 15 STEDMAN WAY LOUDONVILLE NY 12211
Turel Stanley G director 604 SE 121ST AVE C/O ARBOR PARK OFFICE VANCOUVER WA 98683
Jones Delna L. director 39692 CAMINO TEMPLADO INDIO CA 92203
O Brien Betty M director 22500 INGRAM LANE NW SALEM OR 97304
Goward Richard F. Jr. officer: CFO 2623 ABBEY LN. SE SALEM OR 97317
Cary Sean M director 11334 SUMMIT LOOP SE TURNER OR 97392
Jeffrey John Fox officer: CFO/Controller 8800 ENCHANTED WAY SE TURNER OR 97002
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