Equinix WACC - Weighted Average Cost of Capital
The WACC of Equinix Inc (EQIX) is 6.1%.
| Range | Selected | |
| Cost of equity | 5.6% - 7.5% | 6.55% |
| Tax rate | 15.9% - 17.1% | 16.5% |
| Cost of debt | 4.0% - 5.6% | 4.8% |
| WACC | 5.2% - 7.0% | 6.1% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.37 | 0.47 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.6% | 7.5% |
| Tax rate | 15.9% | 17.1% |
| Debt/Equity ratio | 0.2 | 0.2 |
| Cost of debt | 4.0% | 5.6% |
| After-tax WACC | 5.2% | 7.0% |
| Selected WACC | 6.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| EQIX | Equinix Inc | 0.2 | 0.8 | 0.69 |
| AMT | American Tower Corp | 0.37 | -0.16 | -0.12 |
| CCI | Crown Castle International Corp | 0.54 | -0.06 | -0.04 |
| COR | CoreSite Realty Corp | 0.08 | 0.11 | 0.1 |
| DLR | Digital Realty Trust Inc | 0.3 | 0.76 | 0.61 |
| PSA | Public Storage | 0.17 | 0.34 | 0.29 |
| SAFE | Safehold Inc | 3.85 | 0.18 | 0.04 |
| SBAC | SBA Communications Corp | 0.54 | 0.04 | 0.03 |
| UNIT | Uniti Group Inc | 5.09 | 0.29 | 0.06 |
| WY | Weyerhaeuser Co | 0.26 | 0.6 | 0.49 |
| Low | High | |
| Unlevered beta | 0.05 | 0.18 |
| Relevered beta | 0.06 | 0.21 |
| Adjusted relevered beta | 0.37 | 0.47 |
Equinix'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 Equinix:
cost_of_equity (6.55%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.37) + 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.