ALGN WACC - Weighted Average Cost of Capital
The WACC of Align Technology Inc (ALGN) is 6.3%.
| Range | Selected | |
| Cost of equity | 8.1% - 10.3% | 9.2% |
| Tax rate | 30.7% - 34.3% | 32.5% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.8% - 6.8% | 6.3% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.93 | 0.98 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.1% | 10.3% |
| Tax rate | 30.7% | 34.3% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.8% | 6.8% |
| Selected WACC | 6.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| ALGN | Align Technology Inc | 0.94 | 1.21 | 0.73 |
| AVNS | Avanos Medical Inc | 0.24 | 0.58 | 0.5 |
| COO | Cooper Companies Inc | 0.18 | 0.65 | 0.58 |
| HAE | Haemonetics Corp | 0.35 | 0.79 | 0.64 |
| ICUI | ICU Medical Inc | 0.49 | 0.71 | 0.53 |
| MMSI | Merit Medical Systems Inc | 0.13 | 0.63 | 0.58 |
| NEOG | Neogen Corp | 0.87 | 0.83 | 0.52 |
| QDEL | Quidel Corp | 1.27 | 0.81 | 0.43 |
| STAA | STAAR Surgical Co | 0 | 0.66 | 0.66 |
| WST | West Pharmaceutical Services Inc | 0.01 | 0.57 | 0.57 |
| XRAY | DENTSPLY SIRONA Inc | 0.67 | 0.38 | 0.26 |
| Low | High | |
| Unlevered beta | 0.53 | 0.58 |
| Relevered beta | 0.9 | 0.97 |
| Adjusted relevered beta | 0.93 | 0.98 |
ALGN'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 ALGN:
cost_of_equity (9.20%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.93) + 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.