EXPO WACC - Weighted Average Cost of Capital
The WACC of Exponent Inc (EXPO) is 7.2%.
| Range | Selected | |
| Cost of equity | 9.1% - 12.0% | 10.55% |
| Tax rate | 21.4% - 24.0% | 22.7% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 6.5% - 7.9% | 7.2% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.13 | 1.27 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.1% | 12.0% |
| Tax rate | 21.4% | 24.0% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 6.5% | 7.9% |
| Selected WACC | 7.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| EXPO | Exponent Inc | 0.93 | 0.77 | 0.45 |
| CBZ | CBIZ Inc | 0.36 | 0.64 | 0.5 |
| FORR | Forrester Research Inc | 0.17 | 0.79 | 0.7 |
| HIL | Hill International Inc | 0.29 | 1.18 | 0.96 |
| HURN | Huron Consulting Group Inc | 0.14 | 0.46 | 0.42 |
| IBG.TO | IBI Group Inc | 0.19 | 1.17 | 1.02 |
| MG | Mistras Group Inc | 0.82 | 1.04 | 0.64 |
| NLSN | Nielsen Holdings PLC | 0.56 | 1.18 | 0.83 |
| RCMT | R C M Technologies Inc | 0.22 | 0.9 | 0.77 |
| STN.TO | Stantec Inc | 0.13 | 0.91 | 0.83 |
| WLDN | Willdan Group Inc | 0.12 | 0.5 | 0.46 |
| Low | High | |
| Unlevered beta | 0.64 | 0.77 |
| Relevered beta | 1.19 | 1.4 |
| Adjusted relevered beta | 1.13 | 1.27 |
EXPO'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 EXPO:
cost_of_equity (10.55%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.13) + 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.