FATH WACC - Weighted Average Cost of Capital

The WACC of Fathom Digital Manufacturing Corp (FATH) is 11.1%.

The Cost of Equity of Fathom Digital Manufacturing Corp (FATH) is 13.25%.

The Cost of Debt of Fathom Digital Manufacturing Corp (FATH) is 10.60%.

	Range	Selected
Cost of equity	9.70% - 16.80%	13.25%
Tax rate	0.40% - 2.40%	1.40%
Cost of debt	8.80% - 12.40%	10.60%
WACC	9.0% - 13.2%	11.1%

WACC

FATH WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	1.27	2.13

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.70%	16.80%

Tax rate	0.40%	2.40%
Debt/Equity ratio	3.11	3.11
Cost of debt	8.80%	12.40%

After-tax WACC	9.0%	13.2%


Selected WACC	11.1%

FATH'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 FATH:

cost_of_equity (13.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.27) + 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.