ENV WACC - Weighted Average Cost of Capital
The WACC of Envestnet Inc (ENV) is 7.4%.
| Range | Selected | |
| Cost of equity | 7.0% - 10.0% | 8.5% |
| Tax rate | 26.3% - 48.3% | 37.3% |
| Cost of debt | 4.0% - 5.3% | 4.65% |
| WACC | 6.2% - 8.5% | 7.4% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.68 | 0.91 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.0% | 10.0% |
| Tax rate | 26.3% | 48.3% |
| Debt/Equity ratio | 0.25 | 0.25 |
| Cost of debt | 4.0% | 5.3% |
| After-tax WACC | 6.2% | 8.5% |
| Selected WACC | 7.4% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| ENV | Envestnet Inc | 0.25 | 0.08 | 0.07 |
| ALRM | Alarm.com Holdings Inc | 0.33 | 1.05 | 0.87 |
| BL | Blackline Inc | 0.25 | 0.85 | 0.74 |
| BLKB | Blackbaud Inc | 0.34 | 0.54 | 0.44 |
| BOX | Box Inc | 0.14 | 0.46 | 0.42 |
| CGNT | Cognyte Software Ltd | 0 | 0.2 | 0.2 |
| CLDR | Cloudera Inc | 0.1 | 1.11 | 1.04 |
| EGHT | 8x8 Inc | 1.72 | 1.61 | 0.78 |
| ENGH.TO | Enghouse Systems Ltd | 0.01 | 0.46 | 0.46 |
| NEWR | New Relic Inc | 0.08 | 0.93 | 0.89 |
| Low | High | |
| Unlevered beta | 0.45 | 0.75 |
| Relevered beta | 0.52 | 0.87 |
| Adjusted relevered beta | 0.68 | 0.91 |
ENV'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 ENV:
cost_of_equity (8.50%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.68) + 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.