ALXO WACC - Weighted Average Cost of Capital
The WACC of ALX Oncology Holdings Inc (ALXO) is 7.8%.
| Range | Selected | |
| Cost of equity | 7.6% - 11.5% | 9.55% |
| Tax rate | 0.0% - 0.0% | 0% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 6.6% - 9.1% | 7.8% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.81 | 1.18 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.6% | 11.5% |
| Tax rate | 0.0% | 0.0% |
| Debt/Equity ratio | 0.6 | 0.6 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 6.6% | 9.1% |
| Selected WACC | 7.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| ALXO | ALX Oncology Holdings Inc | 0.6 | 1.66 | 1.03 |
| AMTI | Applied Molecular Transport Inc. | 0.05 | 0.47 | 0.45 |
| CCXI | ChemoCentryx Inc | 0.01 | 1.22 | 1.22 |
| FGEN | FibroGen Inc | 4.37 | 0.66 | 0.12 |
| GBT | Global Blood Therapeutics Inc | 0.13 | 0.47 | 0.41 |
| IMCR | Immunocore Holdings PLC | 0.34 | 0.9 | 0.67 |
| LEGN | Legend Biotech Corp | 0.05 | 0.43 | 0.4 |
| LGND | Ligand Pharmaceuticals Inc | 0 | 0.98 | 0.98 |
| PRLD | Prelude Therapeutics Inc | 0 | 0.45 | 0.44 |
| RCUS | Arcus Biosciences Inc | 0.06 | 2.05 | 1.94 |
| Low | High | |
| Unlevered beta | 0.45 | 0.8 |
| Relevered beta | 0.72 | 1.27 |
| Adjusted relevered beta | 0.81 | 1.18 |
ALXO'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 ALXO:
cost_of_equity (9.55%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.81) + 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.