DT WACC - Weighted Average Cost of Capital
The WACC of Dynatrace Inc (DT) is 7.4%.
| Range | Selected | |
| Cost of equity | 9.6% - 12.6% | 11.1% |
| Tax rate | 13.1% - 22.7% | 17.9% |
| Cost of debt | 4.5% - 4.5% | 4.5% |
| WACC | 6.8% - 8.0% | 7.4% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.25 | 1.38 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.6% | 12.6% |
| Tax rate | 13.1% | 22.7% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 4.5% | 4.5% |
| After-tax WACC | 6.8% | 8.0% |
| Selected WACC | 7.4% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| DT | Dynatrace Inc | 1.07 | 1.1 | 0.59 |
| AVLR | Avalara Inc | 1.73 | 0.98 | 0.41 |
| BILL | Bill.com Holdings Inc | 0.18 | 1.57 | 1.37 |
| BL | Blackline Inc | 0.25 | 0.9 | 0.75 |
| DBX | Dropbox Inc | 0.35 | 0.76 | 0.59 |
| FIVN | Five9 Inc | 0.56 | 1.61 | 1.11 |
| GWRE | Guidewire Software Inc | 0.02 | 0.79 | 0.78 |
| INTU | Intuit Inc | 0.03 | 0.59 | 0.58 |
| NUAN | Nuance Communications Inc | 0.05 | 1.11 | 1.07 |
| PTC | PTC Inc | 0.08 | 1.05 | 0.99 |
| ZEN | Zendesk Inc | 0.13 | 0.87 | 0.79 |
| Low | High | |
| Unlevered beta | 0.75 | 0.79 |
| Relevered beta | 1.37 | 1.57 |
| Adjusted relevered beta | 1.25 | 1.38 |
DT'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 DT:
cost_of_equity (11.10%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.25) + 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.