The WACC of Dice Therapeutics Inc (DICE) is 5.7%.
Range | Selected | |
Cost of equity | 6.8% - 8.8% | 7.8% |
Tax rate | 26.2% - 27.0% | 26.6% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 5.2% - 6.2% | 5.7% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 0.64 | 0.71 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.8% | 8.8% |
Tax rate | 26.2% | 27.0% |
Debt/Equity ratio | 1 | 1 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 5.2% | 6.2% |
Selected WACC | 5.7% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
DICE | Dice Therapeutics Inc | 0.82 | 0.56 | 0.35 |
BMY | Bristol-Myers Squibb Co | 0.52 | 0.15 | 0.11 |
CTLT | Catalent Inc | 0.43 | 0.41 | 0.31 |
ELAN | Elanco Animal Health Inc | 0.58 | 1.07 | 0.75 |
JNJ | Johnson & Johnson | 0.1 | 0.11 | 0.1 |
LLY | Eli Lilly and Co | 0.04 | 0.78 | 0.76 |
MRK | Merck & Co Inc | 0.18 | 0.4 | 0.35 |
PFE | Pfizer Inc | 0.44 | 0.35 | 0.26 |
RPRX | Royalty Pharma PLC | 0.38 | 0.17 | 0.13 |
VTRS | Viatris Inc | 1.31 | 0.92 | 0.47 |
ZTS | Zoetis Inc | 0.1 | 0.28 | 0.26 |
Low | High | |
Unlevered beta | 0.26 | 0.35 |
Relevered beta | 0.46 | 0.57 |
Adjusted relevered beta | 0.64 | 0.71 |
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 DICE:
cost_of_equity (7.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.64) + 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.