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TSN (Tyson Foods) WACC % :5.5% (As of Oct. 31, 2024)


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What is Tyson Foods WACC %?

As of today (2024-10-31), Tyson Foods's weighted average cost of capital is 5.5%%. Tyson Foods's ROIC % is 0.58% (calculated using TTM income statement data). Tyson Foods earns returns that do not match up to its cost of capital. It will destroy value as it grows.

For a comprehensive WACC calculation, please access the WACC Calculator.


Tyson Foods WACC % Historical Data

The historical data trend for Tyson Foods'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.

Tyson Foods WACC % Chart

Tyson Foods Annual Data
Trend Sep14 Sep15 Sep16 Sep17 Sep18 Sep19 Sep20 Sep21 Sep22 Sep23
WACC %
Get a 7-Day Free Trial Premium Member Only Premium Member Only 4.00 4.64 5.98 7.23 7.11

Tyson Foods Quarterly Data
Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23 Mar24 Jun24
WACC % Get a 7-Day Free Trial 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 6.09 7.11 6.46 6.67 5.50

Competitive Comparison of Tyson Foods's WACC %

For the Farm Products subindustry, Tyson Foods'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.


Tyson Foods's WACC % Distribution in the Consumer Packaged Goods Industry

For the Consumer Packaged Goods industry and Consumer Defensive sector, Tyson Foods's WACC % distribution charts can be found below:

* The bar in red indicates where Tyson Foods's WACC % falls into.



Tyson Foods 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, Tyson Foods's market capitalization (E) is $20848.060 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 one-year quarterly average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together. As of Jun. 2024, Tyson Foods's latest one-year quarterly average Book Value of Debt (D) is $10097 Mil.
a) weight of equity = E / (E + D) = 20848.060 / (20848.060 + 10097) = 0.6737
b) weight of debt = D / (E + D) = 10097 / (20848.060 + 10097) = 0.3263

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 4.282%. 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. Tyson Foods's beta is 0.56.
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 = 4.282% + 0.56 * 6% = 7.642%

3. Cost of Debt:
GuruFocus uses latest TTM Interest Expense divided by the latest one-year quarterly average debt to get the simplified cost of debt.
As of Jun. 2024, Tyson Foods's interest expense (positive number) was $444 Mil. Its total Book Value of Debt (D) is $10097 Mil.
Cost of Debt = 444 / 10097 = 4.3973%.

4. Multiply by one minus TTM Tax Rate:
GuruFocus uses the most recent TTM Tax Expense divided by the most recent TTM Pre-Tax Income to calculate the tax rate. The calculated TTM tax rate is limited to between 0% and 100%. If the calculated tax rate is higher than 100%, it is set to 100%. If the calculated tax rate is less than 0%, it is set to 0%.
The latest calculated TTM Tax Rate = 46 / 61 = 75.41%.

Tyson Foods'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)
=0.6737*7.642%+0.3263*4.3973%*(1 - 75.41%)
=5.5%

* 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.


Tyson Foods  (NYSE:TSN) 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, Tyson Foods's weighted average cost of capital is 5.5%%. Tyson Foods's ROIC % is 0.58% (calculated using TTM income statement data). Tyson Foods 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 one-year quarterly average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together.
For companies that report quarterly, GuruFocus combines all of the most recent year's quarterly debt data from the beginning of the year to the year-end and calculates the average.
For companies that report semi-annually, GuruFocus combines all of the most recent year's semi-annual debt data from the start of the year to the year-end and calculates the average.
For companies that report annually, GuruFocus combines the beginning and ending annual debt data from the most recent year and then calculates the average.

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 the latest TTM Interest Expense divided by the latest one-year quarterly average debt to get the simplified cost of debt.


Related Terms

Tyson Foods Business Description

Address
2200 West Don Tyson Parkway, Springdale, AR, USA, 72762-6999
Tyson Foods is a protein-focused food producer, selling raw chicken, beef, pork, and prepared foods. Chicken and beef are its two largest segments, each comprising about one-third of US sales. Prepared foods constitute roughly 20% of sales and include brands like Tyson, Jimmy Dean, Hillshire Farm, Ball Park, and Sara Lee. However, most of these are in product categories rife with competition where Tyson does not have a massive market share lead. Tyson sells some products overseas, but the international segment accounts for just 5% of total revenue. The company is an active acquirer, with more recent years' purchases focused on international and food-service markets.
Executives
Noel W White officer: Group VP Fr Meats Op & Comm Sa 2200 W DON TYSON PARKWAY, SPRINGDALE AR 72762
Wes Morris officer: Group President Poultry 2200 W DON TYSON PARKWAY, SPRINGDALE AR 72762
John H Tyson director, officer: Chairman & CEO 2200 DON TYSON PARKWAY, SPRINGDALE AR 72762
Melanie Boulden officer: Grp Pres Prepared Foods & CGO 345 PARK AVENUE, SAN JOSE CA 95110
Kevin M Mcnamara director 2200 DON TYSON PARKWAY, SPRINGDALE AR 72762
Johanna Soderstrom officer: EVP & Chief HR Officer 2200 W DON TYSON PARKWAY, SPRINGDALE AR 72762
Donnie King officer: Grp VP of Poultry & Prep.Foods 2200 DON TYSON PARKWAY, SPRINGDALE AR 72762
Brady J. Stewart officer: Group President Fresh Meats 2200 W. DON TYSON PARKWAY, SPRINGDALE AR 72762
Adam S. Deckinger officer: General Counsel and Secretary 2200 W. DON TYSON PARKWAY, SPRINGDALE AR 72762
Shane Miller officer: Group President Fresh Meats 2200 W DON TYSON PARKWAY, SPRINGDALE AR 72762
Amy Tu officer: EVP & General Counsel 2200 W DON TYSON PARKWAY, SPRINGDALE AR 72762
David R. Bray officer: Group President Poultry 2200 W DON TYSON PARKWAY, SPRINGDALE AR 72762
Jason Nichol officer: Chief Customer Officer 2200 W. DON TYSON PARKWAY, SPRINGDALE AR 72762
Christopher Lynn Langholz officer: President International 2200 W. DON TYSON PARKWAY, SPRINGDALE AR 72762
Banister Gaurdie E. Jr. director 2211 H.H. DOW WAY, MIDLAND MI 48674