ALGM
Allegro Microsystems Inc
Price:  
35.93 
USD
Volume:  
683,700.00
United States | Semiconductors & Semiconductor Equipment
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ALGM WACC - Weighted Average Cost of Capital

The WACC of Allegro Microsystems Inc (ALGM) is 10.9%.

The Cost of Equity of Allegro Microsystems Inc (ALGM) is 11.00%.
The Cost of Debt of Allegro Microsystems Inc (ALGM) is 11.35%.

Range Selected
Cost of equity 9.60% - 12.40% 11.00%
Tax rate 18.90% - 25.10% 22.00%
Cost of debt 9.10% - 13.60% 11.35%
WACC 9.5% - 12.3% 10.9%
WACC

ALGM WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.25 1.34
Additional risk adjustments 0.0% 0.5%
Cost of equity 9.60% 12.40%
Tax rate 18.90% 25.10%
Debt/Equity ratio 0.04 0.04
Cost of debt 9.10% 13.60%
After-tax WACC 9.5% 12.3%
Selected WACC 10.9%

ALGM'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 ALGM:

cost_of_equity (11.00%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.25) + 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.