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Sunstone Hotel Investors, Inc. (SHO) — WACC Analysis

WACC Breakdown

Sunstone Hotel Investors, Inc. (SHO) has a weighted average cost of capital (WACC) of 7.6%. The cost of equity is 9.2%, derived from a beta of 1.00 and a risk-free rate of 5.0%. The after-tax cost of debt is 4.1%. The capital structure is 67.8% equity and 32.2% debt.

Interpretation

A WACC of 7.6% suggests that the market views Sunstone Hotel Investors, Inc. as relatively low-risk, with a lower cost of financing.

Investors can compare SHO's WACC of 7.6% against industry peers to gauge its relative financing costs. A beta of 1.00 reflects the stock's volatility relative to the broader market.

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VALUATION

SHO WACC: 7.55% for Sunstone Hotel Investors, Inc.

Current inputs imply a 9.19% cost of equity and a 5.18% 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

Sunstone Hotel Investors, Inc. Common Stock (SHO) WACC Results
Weighted Average Cost of Capital
7.55%
Cost of Equity
9.19%
Risk-Free Rate4.96%
Beta1.00
Market Risk Premium4.23%
Cost of Debt
4.09%
Pre-Tax Cost of Debt5.18%
Tax Rate21.00%
Tax Shield1.09%
Capital Structure
Equity: 67.85%($2043.52M)
Debt: 32.15%($968.37M)
Equity Component
6.24%
67.85% × 9.19%
Debt Component
1.32%
32.15% × 4.09%

Sunstone Hotel Investors, Inc. (SHO) WACC in context

Sunstone Hotel Investors, Inc. (SHO) currently screens with an estimated WACC of 7.55%. That blends a 9.19% cost of equity, a 5.18% pre-tax cost of debt, and a 67.85% 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 SHO WACC implies

A 7.55% discount rate screens as a relatively low discount rate, which usually supports higher DCF values.

How this page calculates SHO

This page combines CAPM-based cost of equity with SEC-derived debt and capital structure inputs. The current beta is 1.00 and equity accounts for 67.85% 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.