8.53%.
As of today (2022-08-23), Nike’s weighted average cost of capital is 8.53%. Nike’s ROIC % is 32.25% (calculated using TTM income statement data).
In this post
What is Nike’s CAPM?
NKE: NIKE, Inc.
CAPM WACC Model.
| Metrics | Range | Conclusion |
|---|---|---|
| Selected Beta | 0.99 – 1.15 | 1.07 |
| Cost Equity | 7.2% – 8.8% | 8.0% |
| Tax Rate | 13.0% – 13.0% | 13.0% |
| Cost Debt Aftax | 4.8% – 5.2% | 5.0% |
How do you calculate the weighted average cost of capital?
WACC is calculated by multiplying the cost of each capital source (debt and equity) by its relevant weight by market value, and then adding the products together to determine the total.
What is meant by weighted average cost of capital?
The weighted average cost of capital (WACC) represents a firm’s average after-tax cost of capital from all sources, including common stock, preferred stock, bonds, and other forms of debt. WACC is the average rate a company expects to pay to finance its assets.
What is Nike’s approximate cost of equity?
8.0%
NIKE’s cost of equity is 8.0%.
What is the beta for Nike?
(NKE) Valuation Measures & Financial Statistics.
Stock Price History.
| Beta (5Y Monthly) | 1.02 |
|---|---|
| 52 Week High 3 | 179.10 |
| 52 Week Low 3 | 99.53 |
| 50-Day Moving Average 3 | 109.89 |
| 200-Day Moving Average 3 | 134.15 |
What is Nike’s cost of debt?
According to the Nike’s most recent financial statement as reported on January 5, 2021, total debt is at $9.45 billion, with $9.41 billion in long-term debt and $41.00 million in current debt. Adjusting for $8.63 billion in cash-equivalents, the company has a net debt of $816.00 million.
Why do we calculate weighted average cost of capital?
The weighted average cost of capital (WACC) is an important financial precept that is widely used in financial circles to test whether a return on investment can exceed or meet an asset, project, or company’s cost of invested capital (equity + debt).
What is the difference between WACC and cost of capital?
What is the difference between Cost of Capital and WACC? Cost of capital is the total of cost of debt and cost of equity, whereas WACC is the weighted average of these costs derived as a proportion of debt and equity held in the firm.
Is a higher or lower WACC better?
It is essential to note that the lower the WACC, the higher the market value of the company – as you can see from the following simple example; when the WACC is 15%, the market value of the company is 667; and when the WACC falls to 10%, the market value of the company increases to 1,000.
What are the components of weighted average cost of capital?
Notice there are two components of the WACC formula above: A cost of debt (rdebt) and a cost of equity (requity), both multiplied by the proportion of the company’s debt and equity capital, respectively.
Is Nike stock overvalued?
Considering the price multiples, again Nike is very overvalued since its multiples are far higher than those of its competitors in the same sector.
What is Nike debt to equity ratio?
1 Nike’s capital structure has high equity capital relative to debt, with a debt-to-equity ratio of 0.66, though this figure rose sharply in 2020 due to store closures. 2 The company’s enterprise value grew rapidly in the five years leading up to 2021, driven almost entirely by the appreciating value of its equity.
Is Nike a good stock to buy?
As of October 12, 2021, Nike Inc had a $237.9 billion market capitalization, compared to the Footwear median of $4889.7 billion, Nike Inc’s stock is up 9.6% in 2021, up 4.2% in the previous five trading days and up 18.5% in the past year. Currently, Nike Inc’s price-earnings ratio is 40.7.
What is Nike’s risk free rate?
2.37000000%
It is updated daily. The current risk-free rate is 2.37000000%.
What index does Nike belong to?
NIKE’s index membership is Russell 1000, Dow Jones Industrial Average, Dow Jones Composite, S&P 500 Consumer Discretionary, Russell 3000, S&P 100, S&P 500, Investing.com United States 30 and Investing.com United States 500.
What is Nike’s highest stock price?
The latest closing stock price for NIKE as of August 19, 2022 is 113.16. The all-time high NIKE stock closing price was 176.34 on November 05, 2021. The NIKE 52-week high stock price is 179.10, which is 58.3% above the current share price.
How does NIKE use capital?
Capital resources in Nike factories include the sewing machines they use to make the shoes. Also the actual factory buildings are Capital resources. These are both physical capital.
How does NIKE raise capital?
In order to fund their growth, businesses such as Nike widely use Financial Leverage. For most companies, financial capital is raised by issuing debt securities and by selling common stock. The debt and equity that make up Nike’s capital structure have many risks and return implications.
Does NIKE have a lot of debt?
NIKE long term debt for 2021 was $9.413B, a 0.07% increase from 2020. NIKE long term debt for 2020 was $9.406B, a 171.54% increase from 2019.
Compare NKE With Other Stocks.
| NIKE Annual Long Term Debt (Millions of US $) | |
|---|---|
| 2020 | $9,406 |
| 2019 | $3,464 |
| 2018 | $3,468 |
| 2017 | $3,471 |
Why is WACC not useful?
Unfortunately, the WACC is flawed as the discount rate because it carries far too many false assumptions, relies on beta as a form of risk, and can be misleading due to the tax shield on the cost of debt. Individual/retail investors should therefore avoid using the WACC as their discount rate for valuation purposes.