Axon WACC - Weighted Average Cost of Capital
The WACC of Axon Enterprise Inc (AXON) is 8.8%.
| Range | Selected | |
| Cost of equity | 7.3% - 10.5% | 8.9% |
| Tax rate | 20.0% - 38.1% | 29.05% |
| Cost of debt | 7.0% - 7.0% | 7% |
| WACC | 7.3% - 10.4% | 8.8% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.74 | 1 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.3% | 10.5% |
| Tax rate | 20.0% | 38.1% |
| Debt/Equity ratio | 0.01 | 0.01 |
| Cost of debt | 7.0% | 7.0% |
| After-tax WACC | 7.3% | 10.4% |
| Selected WACC | 8.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| AXON | Axon Enterprise Inc | 0.01 | 1.68 | 1.67 |
| AJRD | Aerojet Rocketdyne Holdings Inc | 0.06 | 0.54 | 0.52 |
| AVAV | AeroVironment Inc | 0 | 1.4 | 1.39 |
| BWXT | BWX Technologies Inc | 0.1 | 1.11 | 1.04 |
| HRX.TO | Heroux Devtek Inc | 0.2 | 0.21 | 0.18 |
| HXL | Hexcel Corp | 0.17 | 1.08 | 0.96 |
| KTOS | Kratos Defense and Security Solutions Inc | 0.04 | 1.39 | 1.34 |
| MRCY | Mercury Systems Inc | 0.21 | 0.76 | 0.66 |
| SIF | SIFCO Industries Inc | 1.29 | 0.91 | 0.46 |
| TATT | TAT Technologies Ltd | 0.05 | 0.56 | 0.53 |
| Low | High | |
| Unlevered beta | 0.61 | 0.99 |
| Relevered beta | 0.61 | 1 |
| Adjusted relevered beta | 0.74 | 1 |
Axon'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 Axon:
cost_of_equity (8.90%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.74) + 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.