BDX WACC - Weighted Average Cost of Capital
The WACC of Becton Dickinson and Co (BDX) is 7.2%.
| Range | Selected | |
| Cost of equity | 7.1% - 9.8% | 8.45% |
| Tax rate | 8.2% - 11.0% | 9.6% |
| Cost of debt | 4.0% - 5.1% | 4.55% |
| WACC | 6.1% - 8.3% | 7.2% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.71 | 0.88 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.1% | 9.8% |
| Tax rate | 8.2% | 11.0% |
| Debt/Equity ratio | 0.4 | 0.4 |
| Cost of debt | 4.0% | 5.1% |
| After-tax WACC | 6.1% | 8.3% |
| Selected WACC | 7.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| BDX | Becton Dickinson and Co | 0.4 | 0.16 | 0.12 |
| BAX | Baxter International Inc | 0.81 | 0.48 | 0.27 |
| BSX | Boston Scientific Corp | 0.07 | 0.87 | 0.82 |
| DXCM | Dexcom Inc | 0.07 | 1.26 | 1.18 |
| EW | Edwards Lifesciences Corp | 0.01 | 0.53 | 0.52 |
| HOLX | Hologic Inc | 0.2 | -0.26 | -0.22 |
| RMD | Resmed Inc | 0.02 | 0.72 | 0.71 |
| SYK | Stryker Corp | 0.09 | 0.54 | 0.5 |
| VAR | Varian Medical Systems Inc | 0.02 | 1.07 | 1.04 |
| ZBH | Zimmer Biomet Holdings Inc | 0.32 | 0.26 | 0.2 |
| Low | High | |
| Unlevered beta | 0.41 | 0.6 |
| Relevered beta | 0.57 | 0.82 |
| Adjusted relevered beta | 0.71 | 0.88 |
BDX'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 BDX:
cost_of_equity (8.45%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.71) + 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.