The WACC of ACI Worldwide Inc (ACIW) is 9.6%.
Range | Selected | |
Cost of equity | 9.4% - 12.0% | 10.7% |
Tax rate | 23.4% - 26.6% | 25% |
Cost of debt | 5.1% - 5.4% | 5.25% |
WACC | 8.5% - 10.7% | 9.6% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 1.2 | 1.28 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 9.4% | 12.0% |
Tax rate | 23.4% | 26.6% |
Debt/Equity ratio | 0.19 | 0.19 |
Cost of debt | 5.1% | 5.4% |
After-tax WACC | 8.5% | 10.7% |
Selected WACC | 9.6% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
ACIW | ACI Worldwide Inc | 0.19 | 0.97 | 0.85 |
ALTR | Altair Engineering Inc | 0.02 | 0.77 | 0.76 |
CDNS | Cadence Design Systems Inc | 0.03 | 1.39 | 1.36 |
CRM | Salesforce.Com Inc | 0.03 | 1.27 | 1.24 |
CSOD | Cornerstone OnDemand Inc | 0.31 | 1.24 | 1.01 |
EPAY | Bottomline Technologies (DE) Inc | 0.05 | 1.27 | 1.23 |
EVBG | Everbridge Inc | 0.25 | 1.46 | 1.23 |
LPSN | LivePerson Inc | 6.04 | 1.06 | 0.19 |
SNPS | Synopsys Inc | 0 | 1.51 | 1.51 |
VRNT | Verint Systems Inc | 0.37 | 1.6 | 1.26 |
Low | High | |
Unlevered beta | 1.14 | 1.23 |
Relevered beta | 1.3 | 1.42 |
Adjusted relevered beta | 1.2 | 1.28 |
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for ACIW:
cost_of_equity (10.70%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.2) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.