Skip to main content

2015 Valuation Handbook: Industry Cost of Capital

2015 Valuation Handbook: Industry Cost of Capital

Roger J. Grabowski, James P. Harrington, Carla Nunes

ISBN: 978-1-119-07047-4

Jul 2015

336 pages

Select type: Hardcover

In Stock

$445.00

Description

The New Standard Source of Industry-level Analysis

The 2015 Valuation Handbook ‒ Industry Cost of Capital includes cost of capital estimates (equity capital, debt capital, and weighted average cost of capital, or WACC) for over 200 U.S. industries, plus a host of detailed statistics that can be used for benchmarking purposes,

Don't Forget the Quarterly Updates

The hardcover 2015 Valuation Handbook - Industry Cost of Capital includes U.S. industry data updated through March 2015. This critical analysis is updated quarterly with data through June, September, and December. Ensure that you are using the most up-to-date data and information available: add the Quarterly Updates and keep your data library current.

For more information about Duff & Phelps valuation data resources published by Wiley, please visit www.wiley.com/go/valuationhandbooks.

Also Available

Key Features

  • Over 200 U.S. industries analyzed: The 2015 Valuation Handbook ‒ Industry Cost of Capital provides comprehensive, detailed industry-level analyses that can be used for benchmarking purposes. Over 200 U.S. industries organized by standard industrial classification (SIC) code are presented.  
  • Up to 8 separate cost of equity and WACC estimates, plus cost of debt, by industry: The 2015 Valuation Handbook ‒ Industry Cost of Capital provides cost of equity capital and WACC estimates for each industry using multiple estimation models (various build-up models, CAPM, CAPM adjusted for size, 1-stage and 3-stage discounted cash flow (DCF) models, and Fama-French multi-factor model). Cost of debt is also estimated for each industry.
  • Industry and peer group betas: The 2015 Valuation Handbook ‒ Industry Cost of Capital provides levered and unlevered beta estimates for each industry (e.g. ordinary-least squares (OLS) beta, sum beta, downside beta, etc.), plus peer group betas adjusted to the industry average based upon statistical quality.
  • Additional industry statistics: The 2015 Valuation Handbook ‒ Industry Cost of Capital provides detailed statistics for sales, market capitalization, capital structure, valuation (trading) multiples, financial and profitability ratios, equity returns, aggregate forward-looking earnings-per-share (EPS) growth rates, and more.
  • Analysis of off-balance-sheet debt: The 2015 Valuation Handbook ‒ Industry Cost of Capital includes a separate analysis of "off-balance-sheet" debt by industry (capitalized operating leases and unfunded pension liabilities),
  • Analysis of high-financial-risk companies: The 2015 Valuation Handbook ‒ Industry Cost of Capital includes a separate analysis of "high-financial-risk" companies by industry.
Quarterly Updates are (i) optional, and (ii) not sold separately. Quarterly Updates are delivered in PDF format only.

Acknowledgements viII

Introduction 1

Who Should Use the Valuation Handbook – Industry Cost of Capital 1

Industry-Level Cost of Capital Estimates 2

Industry-Level Statistics, Capital Structure, Valuation Multiples, and Betas 2

Analysis of Capital Structure Including Off-Balance-Sheet Liabilities 3

New in the 2015 Valuation Handbook �� Industry Cost of Capital 3

Methodology 4

“Data Through” Date 4

County of Incorporation 4

Company Type 4

Industry Identification by SIC Code 4

Minimum Number of Companies Required 5

Data Sources 5

Company Screening Process 9

Medians and Industry Composites 14

“Latest” and “5-Year” Averages 17

Calculations of Industry Financial Statistics 22

Three Largest and Three Smallest Companies by Sales and Total Assets 22

Annualized Monthly Performance Statistics 22

Number of Companies in the Median, the Composites, and the High-Financial-Risk Category 23

Return Ratios 24

Liquidity Ratio 27

Profitability Ratio 28

Growth Rates 29

Beta Overview 30

Levered Betas 31

Adjusted Betas 34

Unlevered Betas 36

Equity Valuation Multiples 38

Enterprise Valuation (EV) Multiples 41

Fama-French (F-F) 5-Factor Model 46

Cost of Debt 48

Leverage Ratios 49

Cost of Equity Capital Estimates 53

CAPM 54

Cost of Equity Capital Estimates �� Using the CRSP Deciles Size Study 55

CAPM + Size Premium 56

Build-up Method 58

Cost of Equity Capital Estimates �� Using the Risk Premium Report Study 60

CAPM + Size Premium 60

Build-up 1 Method 63

Discounted Cash Flow (DCF) Models 65

1-Stage DCF 65

3-Stage DCF 67

Fama-French (F-F) 5-Factor Model 70

Weighted Average Cost of Capital (WACC) 72

WACC Calculations 75

Exhibit 11: Distribution of Company-level Average WACC by Industry 78

Exhibit 12: Average and Median of Company-level Average WACC by Industry for “Healthy” Companies and “High-Financial-Risk” Companies 79

Appendices

Appendix A Relative Impact of Off-Balance-Sheet Debt-Equivalent Liabilities on the Capital Structure, as Measured by Total Capital

Appendix B Leverage Ratios and Unlevered Betas Calculated Using (i) Book Debt, and (ii) Book Debt Plus Off-Balance-Sheet Debt

Appendix C Definitions of Standard and Poor’s Compustat Data Items Used in Calculations

Industry Data Exhibits

Division A: Agriculture, Forestry, and Fishing

Division B: Mining

Division C: Construction

Division D: Manufacturing

Division E: Transportation, Communications, Electric, Gas, and Sanitary Services

Division F: Wholesale Trade

Division G: Retail Trade

Division H: Finance, Insurance, and Real Estate

Division I: Services

Size Groupings: Large-, Mid-, Low-, and Micro-Capitalization Companies