ADT WACC - Weighted Average Cost of Capital
The WACC of ADT Inc (ADT) is 6.9%.
| Range | Selected | |
| Cost of equity | 8.4% - 11.8% | 10.1% |
| Tax rate | 25.3% - 26.3% | 25.8% |
| Cost of debt | 4.9% - 6.1% | 5.5% |
| WACC | 5.9% - 8.0% | 6.9% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.98 | 1.23 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.4% | 11.8% |
| Tax rate | 25.3% | 26.3% |
| Debt/Equity ratio | 1.09 | 1.09 |
| Cost of debt | 4.9% | 6.1% |
| After-tax WACC | 5.9% | 8.0% |
| Selected WACC | 6.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| ADT | ADT Inc | 1.09 | 0.54 | 0.3 |
| ABM | ABM Industries Inc | 0.47 | 0.85 | 0.63 |
| BCO | Brinks Co | 1.04 | 0.59 | 0.33 |
| BLPG | Blue Line Protection Group Inc | 1.85 | 0.93 | 0.39 |
| CANN | General Cannabis Corp | 5.43 | -0.53 | -0.1 |
| CLH | Clean Harbors Inc | 0.24 | 0.93 | 0.79 |
| CVA | Covanta Holding Corp | 0.95 | 1.38 | 0.81 |
| CXW | Corecivic Inc | 0.44 | 1.47 | 1.11 |
| HSC | Harsco Corp | 1.86 | 1.71 | 0.72 |
| GFS.L | G4S PLC | 0.77 | 1.28 | 0.81 |
| Low | High | |
| Unlevered beta | 0.54 | 0.75 |
| Relevered beta | 0.97 | 1.34 |
| Adjusted relevered beta | 0.98 | 1.23 |
ADT's CAPM model and how its cost of Equity is calculated
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 ADT:
cost_of_equity (10.10%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.98) + 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.