ADT
ADT Inc
Price:  
8.15 
USD
Volume:  
14,456,397.00
United States | Commercial Services & Supplies
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ADT WACC - Weighted Average Cost of Capital

The WACC of ADT Inc (ADT) is 7.1%.

The Cost of Equity of ADT Inc (ADT) is 10.70%.
The Cost of Debt of ADT Inc (ADT) is 5.25%.

Range Selected
Cost of equity 9.40% - 12.00% 10.70%
Tax rate 25.30% - 26.30% 25.80%
Cost of debt 4.90% - 5.60% 5.25%
WACC 6.3% - 7.8% 7.1%
WACC

ADT WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.2 1.27
Additional risk adjustments 0.0% 0.5%
Cost of equity 9.40% 12.00%
Tax rate 25.30% 26.30%
Debt/Equity ratio 1.13 1.13
Cost of debt 4.90% 5.60%
After-tax WACC 6.3% 7.8%
Selected WACC 7.1%

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 (10.70%) = 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.