Bmy WACC - Weighted Average Cost of Capital
The WACC of Bristol-Myers Squibb Co (BMY) is 5.9%.
| Range | Selected | |
| Cost of equity | 5.9% - 8.0% | 6.95% |
| Tax rate | 10.7% - 15.1% | 12.9% |
| Cost of debt | 4.0% - 4.9% | 4.45% |
| WACC | 5.1% - 6.7% | 5.9% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.44 | 0.57 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.9% | 8.0% |
| Tax rate | 10.7% | 15.1% |
| Debt/Equity ratio | 0.52 | 0.52 |
| Cost of debt | 4.0% | 4.9% |
| After-tax WACC | 5.1% | 6.7% |
| Selected WACC | 5.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| BMY | Bristol-Myers Squibb Co | 0.52 | 0.13 | 0.09 |
| BHC.TO | Bausch Health Companies Inc | 8.47 | 1.15 | 0.14 |
| ENDP | Endo International PLC | 113.89 | 1.1 | 0.01 |
| HZNP | Horizon Therapeutics PLC | 0.1 | -0.28 | -0.26 |
| LCI | Lannett Company Inc | 83.32 | 0.95 | 0.01 |
| LLY | Eli Lilly and Co | 0.05 | 0.78 | 0.76 |
| MRK | Merck & Co Inc | 0.18 | 0.4 | 0.34 |
| PFE | Pfizer Inc | 0.45 | 0.33 | 0.24 |
| VTRS | Viatris Inc | 1.28 | 0.89 | 0.42 |
| ZTS | Zoetis Inc | 0.09 | 0.28 | 0.26 |
| Low | High | |
| Unlevered beta | 0.12 | 0.24 |
| Relevered beta | 0.16 | 0.36 |
| Adjusted relevered beta | 0.44 | 0.57 |
Bmy'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 Bmy:
cost_of_equity (6.95%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.44) + 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.