ESE WACC - Weighted Average Cost of Capital

The WACC of ESCO Technologies Inc (ESE) is 9.1%.

The Cost of Equity of ESCO Technologies Inc (ESE) is 9.25%.

The Cost of Debt of ESCO Technologies Inc (ESE) is 4.75%.

	Range	Selected
Cost of equity	7.80% - 10.70%	9.25%
Tax rate	21.90% - 22.40%	22.15%
Cost of debt	4.60% - 4.90%	4.75%
WACC	7.7% - 10.5%	9.1%

WACC

ESE WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	0.86	1.04

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.80%	10.70%

Tax rate	21.90%	22.40%
Debt/Equity ratio	0.03	0.03
Cost of debt	4.60%	4.90%

After-tax WACC	7.7%	10.5%


Selected WACC	9.1%

ESE'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 ESE:

cost_of_equity (9.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.86) + 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.