FENG WACC - Weighted Average Cost of Capital
The WACC of Phoenix New Media Ltd (FENG) is 6.1%.
| Range | Selected | |
| Cost of equity | 5.5% - 9.9% | 7.7% |
| Tax rate | 6.6% - 16.9% | 11.75% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.1% - 7.0% | 6.1% |
| Category | Low | High |
| Long-term bond rate | 2.6% | 3.1% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 0.34 | 0.93 |
| Additional risk adjustments | 1.5% | 2.0% |
| Cost of equity | 5.5% | 9.9% |
| Tax rate | 6.6% | 16.9% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.1% | 7.0% |
| Selected WACC | 6.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| FENG | Phoenix New Media Ltd | 0.98 | 0.4 | 0.21 |
| EVTI | Eventure Interactive Inc | 643.34 | 0.94 | 0 |
| FLYY.CN | Media Central Corporation Inc | 0.26 | -0.24 | -0.19 |
| MFON | Mobivity Holdings Corp | 0.43 | -0.03 | -0.02 |
| MRNJ | Metatron Inc | 0.23 | -351.82 | -291.12 |
| MYID.V | Killi Ltd | 0.15 | 1.59 | 1.4 |
| SEEK | TheDirectory.com Inc | 151.64 | -2.68 | -0.02 |
| YIPI | Yippy Inc | 47.92 | -119.68 | -2.66 |
| YOO.V | YANGAROO Inc | 0.6 | 0.77 | 0.49 |
| Low | High | |
| Unlevered beta | -0.02 | 0 |
| Relevered beta | 0.01 | 0.9 |
| Adjusted relevered beta | 0.34 | 0.93 |
FENG'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 FENG:
cost_of_equity (7.70%) = risk_free_rate (2.85%) + equity_risk_premium (4.70%) * adjusted_beta (0.34) + risk_adjustments (1.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.