FBIO WACC - Weighted Average Cost of Capital
The WACC of Fortress Biotech Inc (FBIO) is 9.8%.
| Range | Selected | |
| Cost of equity | 8.2% - 11.8% | 10% |
| Tax rate | 0.2% - 0.3% | 0.25% |
| Cost of debt | 7.0% - 12.1% | 9.55% |
| WACC | 7.6% - 11.9% | 9.8% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.95 | 1.24 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.2% | 11.8% |
| Tax rate | 0.2% | 0.3% |
| Debt/Equity ratio | 1.02 | 1.02 |
| Cost of debt | 7.0% | 12.1% |
| After-tax WACC | 7.6% | 11.9% |
| Selected WACC | 9.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| FBIO | Fortress Biotech Inc | 1.02 | 1.03 | 0.51 |
| ABBV | Abbvie Inc | 0.2 | 0.33 | 0.28 |
| ALXN | Alexion Pharmaceuticals Inc | 0.07 | 1.25 | 1.17 |
| AMGN | Amgen Inc | 0.38 | 0.38 | 0.28 |
| BIIB | Biogen Inc | 0.34 | 0.5 | 0.37 |
| GILD | Gilead Sciences Inc | 0.2 | 0.35 | 0.29 |
| MRNA | Moderna Inc | 0.01 | 1.01 | 1.01 |
| REGN | Regeneron Pharmaceuticals Inc | 0.05 | 0.74 | 0.71 |
| VRTX | Vertex Pharmaceuticals Inc | 0 | 0.65 | 0.65 |
| 950160.KQ | Kolon TissueGene Inc | 0 | 0.81 | 0.8 |
| Low | High | |
| Unlevered beta | 0.46 | 0.67 |
| Relevered beta | 0.93 | 1.36 |
| Adjusted relevered beta | 0.95 | 1.24 |
FBIO'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 FBIO:
cost_of_equity (10.00%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.95) + 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.