The WACC of ATI Physical Therapy Inc (ATIP) is 23.4%.
Range | Selected | |
Cost of equity | 74.8% - 168.1% | 121.45% |
Tax rate | 3.5% - 5.8% | 4.65% |
Cost of debt | 23.9% - 23.9% | 23.9% |
WACC | 23.4% - 23.5% | 23.4% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 15.41 | 29.16 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 74.8% | 168.1% |
Tax rate | 3.5% | 5.8% |
Debt/Equity ratio | 144.89 | 144.89 |
Cost of debt | 23.9% | 23.9% |
After-tax WACC | 23.4% | 23.5% |
Selected WACC | 23.4% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
ATIP | ATI Physical Therapy Inc | 144.89 | 0.36 | 0 |
BDSX | Biodesix, Inc. | 0.92 | 0.27 | 0.14 |
CCEL | Cryo-Cell International Inc | 0.21 | -0.13 | -0.1 |
CVS | CVS Health Corp | 0.78 | 0.57 | 0.33 |
ENZ | Enzo Biochem Inc | 0.01 | 1.9 | 1.88 |
ETAO | ETAO International Co Ltd | 0.06 | 0.04 | 0.03 |
PMD | Psychemedics Corp | 0.02 | 1.03 | 1.02 |
WGS | GeneDx Holdings Corp | 0.03 | 1.44 | 1.4 |
XCRT | Xcelerate Inc | 0.11 | 0.29 | 0.26 |
Low | High | |
Unlevered beta | 0.17 | 0.31 |
Relevered beta | 22.51 | 43.03 |
Adjusted relevered beta | 15.41 | 29.16 |
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 ATIP:
cost_of_equity (121.45%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (15.41) + 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.