ALLK
Allakos Inc
Price:  
0.33 
USD
Volume:  
197,489.00
United States | Biotechnology
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Allakos WACC - Weighted Average Cost of Capital

The WACC of Allakos Inc (ALLK) is 8.3%.

The Cost of Equity of Allakos Inc (ALLK) is 13.05%.
The Cost of Debt of Allakos Inc (ALLK) is 5.00%.

Range Selected
Cost of equity 11.40% - 14.70% 13.05%
Tax rate 26.20% - 27.00% 26.60%
Cost of debt 5.00% - 5.00% 5.00%
WACC 7.5% - 9.2% 8.3%
WACC

Allakos WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.63 1.75
Additional risk adjustments 0.0% 0.5%
Cost of equity 11.40% 14.70%
Tax rate 26.20% 27.00%
Debt/Equity ratio 1 1
Cost of debt 5.00% 5.00%
After-tax WACC 7.5% 9.2%
Selected WACC 8.3%

Allakos'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 Allakos:

cost_of_equity (13.05%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.63) + 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.