The WACC of AstroNova Inc (ALOT) is 9.5%.
Range | Selected | |
Cost of equity | 8.4% - 14.4% | 11.4% |
Tax rate | 19.5% - 21.4% | 20.45% |
Cost of debt | 7.7% - 9.1% | 8.4% |
WACC | 7.5% - 11.5% | 9.5% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 0.98 | 1.71 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 8.4% | 14.4% |
Tax rate | 19.5% | 21.4% |
Debt/Equity ratio | 0.66 | 0.66 |
Cost of debt | 7.7% | 9.1% |
After-tax WACC | 7.5% | 11.5% |
Selected WACC | 9.5% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
ALOT | AstroNova Inc | 0.66 | 0.69 | 0.45 |
1337.HK | Razer Inc | 0.01 | 1.35 | 1.34 |
IGOI | iGO Inc | 0.92 | 0.89 | 0.51 |
NTAP | NetApp Inc | 0.15 | 1.53 | 1.36 |
OSS | One Stop Systems Inc | 0.01 | 1.6 | 1.58 |
PSTG | Pure Storage Inc | 0.01 | 2.1 | 2.09 |
SCKT | Socket Mobile Inc | 0.43 | 0.84 | 0.63 |
STX | Seagate Technology PLC | 0.19 | 1.91 | 1.66 |
TACT | TransAct Technologies Inc | 0.08 | 0.68 | 0.64 |
Low | High | |
Unlevered beta | 0.78 | 1.36 |
Relevered beta | 0.97 | 2.06 |
Adjusted relevered beta | 0.98 | 1.71 |
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 ALOT:
cost_of_equity (11.40%) = 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.