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WBA (Walgreens Boots Alliance) WACC % :3.15% (As of Oct. 31, 2024)


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What is Walgreens Boots Alliance WACC %?

As of today (2024-10-31), Walgreens Boots Alliance's weighted average cost of capital is 3.15%%. Walgreens Boots Alliance's ROIC % is -2.28% (calculated using TTM income statement data). Walgreens Boots Alliance 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.


Walgreens Boots Alliance WACC % Historical Data

The historical data trend for Walgreens Boots Alliance'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.

Walgreens Boots Alliance WACC % Chart

Walgreens Boots Alliance Annual Data
Trend Aug15 Aug16 Aug17 Aug18 Aug19 Aug20 Aug21 Aug22 Aug23 Aug24
WACC %
Get a 7-Day Free Trial Premium Member Only Premium Member Only 1.80 2.75 3.50 4.58 3.06

Walgreens Boots Alliance Quarterly Data
Nov19 Feb20 May20 Aug20 Nov20 Feb21 May21 Aug21 Nov21 Feb22 May22 Aug22 Nov22 Feb23 May23 Aug23 Nov23 Feb24 May24 Aug24
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 4.58 3.32 4.63 4.18 3.06

Competitive Comparison of Walgreens Boots Alliance's WACC %

For the Pharmaceutical Retailers subindustry, Walgreens Boots Alliance'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.


Walgreens Boots Alliance's WACC % Distribution in the Healthcare Providers & Services Industry

For the Healthcare Providers & Services industry and Healthcare sector, Walgreens Boots Alliance's WACC % distribution charts can be found below:

* The bar in red indicates where Walgreens Boots Alliance's WACC % falls into.



Walgreens Boots Alliance 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, Walgreens Boots Alliance's market capitalization (E) is $8179.279 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 Aug. 2024, Walgreens Boots Alliance's latest one-year quarterly average Book Value of Debt (D) is $33284.4 Mil.
a) weight of equity = E / (E + D) = 8179.279 / (8179.279 + 33284.4) = 0.1973
b) weight of debt = D / (E + D) = 33284.4 / (8179.279 + 33284.4) = 0.8027

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. Walgreens Boots Alliance's beta is 0.97.
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% + 0.97 * 6% = 10.102%

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 Aug. 2024, Walgreens Boots Alliance's interest expense (positive number) was $481 Mil. Its total Book Value of Debt (D) is $33284.4 Mil.
Cost of Debt = 481 / 33284.4 = 1.4451%.

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 = 1246 / -14219 = -8.76%, which is less than 0%. Therefore it's set to 0%.

Walgreens Boots Alliance'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)
=0.1973*10.102%+0.8027*1.4451%*(1 - 0%)
=3.15%

* 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.


Walgreens Boots Alliance  (NAS:WBA) 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, Walgreens Boots Alliance's weighted average cost of capital is 3.15%%. Walgreens Boots Alliance's ROIC % is -2.28% (calculated using TTM income statement data). Walgreens Boots Alliance 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

Walgreens Boots Alliance Business Description

Address
108 Wilmot Road, Deerfield, IL, USA, 60015
Walgreens Boots Alliance is one of the largest retail pharmacy chains in the US, with over 8,500 locations. Nearly three quarters of Americans live within five miles of a Walgreens location. Roughly two thirds of revenue is generated from prescription drug sales; Walgreens makes up 20% of total prescription revenue in the US. Walgreens also generates sales from retail products (general wellness consumables and its own branded merchandise), European drug wholesale, and healthcare. With more locations incorporating additional services like Health Corner and Village Medical, Walgreens creates an omnichannel experience for patients and positions itself as a one-stop healthcare provider.
Executives
Inderpal S Bhandari director C/O WALGREENS BOOTS ALLIANCE, INC., DEERFIELD IL 60015
Manmohan Mahajan officer: SVP, Global Controller and CAO C/O WALGREENS BOOTS ALLIANCE, INC., 108 WILMOT ROAD, DEERFIELD IL 60015
Nancy M Schlichting director 200 WILMOT ROAD, DEERFIELD IL 60015
Timothy C Wentworth director, officer: Chief Executive Officer C/O EXPRESS SCRIPTS HOLDING COMPANY, ONE EXPRESS WAY, ST. LOUIS MO 63121
Richard P. Gates officer: SVP, Chief Pharmacy Officer C/O WALGREENS BOOTS ALLIANCE, INC., 108 WILMOT ROAD, DEERFIELD IL 60015
Neal J. Sample officer: EVP, Chief Information Officer 200 VESEY STREET, NEW YORK NY 10285
Todd Heckman officer: Interim Global Controller C/O WALGREENS BOOTS ALLIANCE, INC., 108 WILMOT ROAD, DEERFIELD IL 60015
Polen Thomas E Jr director BECTON, DICKINSON AND COMPANY, 1 BECTON DRIVE, FRANKLIN LAKES NJ 07417
John Patrick Driscoll officer: EVP, Pres. U.S. Healthcare C/O WALGREENS BOOTS ALLIANCE, INC., 108 WILMOT ROAD, DEERFIELD IL 60015
Rosalind G Brewer director, officer: CEO C/O MOLSON COORS BREWING COMPANY, 1225 17TH STREET, SUITE 3200, DENVER CO 80202
Kevin M. Ban officer: EVP, Chief Medical Officer C/O WALGREENS BOOTS ALLIANCE, INC., 108 WILMOT ROAD, DEERFIELD IL 60015
Bryan C Hanson director ZIMMER BIOMET HOLDINGS, 345 E. MAIN STREET, WARSAW IN 46580
Henry Lee Cooper officer: EVP, Pres. Walgreens Pharmacy C/O WALGREENS BOOTS ALLIANCE, INC., 108 WILMOT ROAD, DEERFIELD IL 60015
Tracey D Brown officer: SVP, Pres., Walgreens Retail 675 AVENUE OF THE AMERICAS, 6TH FLOOR, NEW YORK NY 10010
Steven J Shulman director 1564 NE EXPRESSWAY, ATTN: BJ PURCELL, ATLANTA GA 30329

Walgreens Boots Alliance Headlines

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