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BRIGHT HORIZONS FAMILY SOLUTIONS INC. (BFAM) — WACC Analysis

WACC Breakdown

BRIGHT HORIZONS FAMILY SOLUTIONS INC. (BFAM) has a weighted average cost of capital (WACC) of 7.5%. The cost of equity is 8.8%, derived from a beta of 0.76 and a risk-free rate of 5.2%. The after-tax cost of debt is 3.6%. The capital structure is 75.9% equity and 24.1% debt.

Interpretation

A WACC of 7.5% suggests that the market views BRIGHT HORIZONS FAMILY SOLUTIONS INC. as relatively low-risk, with a lower cost of financing.

Investors can compare BFAM's WACC of 7.5% against industry peers to gauge its relative financing costs. A beta of 0.76 reflects the stock's volatility relative to the broader market.

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VALUATION

BFAM WACC: 7.54% for BRIGHT HORIZONS FAMILY SOLUTIONS INC.

Current inputs imply a 8.77% cost of equity and a 4.61% pre-tax cost of debt. Use this discount rate as a starting point for DCF validation.

[01]Current Market Data
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WACC Calculation Process
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Market Data Loaded
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Company Data Fetched
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Beta Calculated (5Y)
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Inputs Auto-Populated
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WACC Calculated
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Step 2: Enter Ticker Symbol
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Step 4: Review Auto-Populated WACC Inputs

Values are automatically populated from real data. You can adjust them manually if needed.

4.30%
1.000
4.23%
5.00%
21.00%
70.00%
Debt: 30.00%Equity: 70.00%

Please enter a valid company ticker to calculate WACC

BRIGHT HORIZONS FAMILY SOLUTIONS INC. Common Stock (BFAM) WACC Results
Weighted Average Cost of Capital
7.54%
Cost of Equity
8.77%
Risk-Free Rate5.22%
Beta0.76
Market Risk Premium4.23%
Cost of Debt
3.65%
Pre-Tax Cost of Debt4.61%
Tax Rate21.00%
Tax Shield0.97%
Capital Structure
Equity: 75.87%($3399.61M)
Debt: 24.13%($1081.43M)
Equity Component
6.66%
75.87% × 8.77%
Debt Component
0.88%
24.13% × 3.65%

BRIGHT HORIZONS FAMILY SOLUTIONS INC. (BFAM) WACC in context

BRIGHT HORIZONS FAMILY SOLUTIONS INC. (BFAM) currently screens with an estimated WACC of 7.54%. That blends a 8.77% cost of equity, a 4.61% pre-tax cost of debt, and a 75.87% equity weight into the discount rate you would typically use in a DCF model.

screens as a relatively low discount rate, which usually supports higher DCF values.

What BFAM WACC implies

A 7.54% discount rate screens as a relatively low discount rate, which usually supports higher DCF values.

How this page calculates BFAM

This page combines CAPM-based cost of equity with SEC-derived debt and capital structure inputs. The current beta is 0.76 and equity accounts for 75.87% of capital.

What to do next

Validate business quality on the company page, then carry the same discount-rate assumptions into the DCF page to test fair value sensitivity.

Disclaimer: This is not financial advice. Data sourced from SEC EDGAR and Polygon.io. Past performance does not guarantee future results. Always conduct your own research before making investment decisions.