FICO WACC - Weighted Average Cost of Capital
The WACC of Fair Isaac Corp (FICO) is 8.1%.
| Range | Selected | |
| Cost of equity | 6.7% - 9.8% | 8.25% |
| Tax rate | 18.9% - 20.4% | 19.65% |
| Cost of debt | 4.9% - 5.0% | 4.95% |
| WACC | 6.6% - 9.5% | 8.1% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.63 | 0.88 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.7% | 9.8% |
| Tax rate | 18.9% | 20.4% |
| Debt/Equity ratio | 0.05 | 0.05 |
| Cost of debt | 4.9% | 5.0% |
| After-tax WACC | 6.6% | 9.5% |
| Selected WACC | 8.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| FICO | Fair Isaac Corp | 0.05 | 1.22 | 1.17 |
| ACIW | ACI Worldwide Inc | 0.2 | 0.98 | 0.84 |
| ALTR | Altair Engineering Inc | 0.02 | 0.77 | 0.76 |
| CTK | CooTek (Cayman) Inc | 2.94 | 0.48 | 0.14 |
| EVBG | Everbridge Inc | 0.25 | 1.46 | 1.22 |
| GTYH | Gty Technology Holdings Inc | 0.07 | -0.41 | -0.39 |
| INVU | Investview Inc | 0.03 | -0.66 | -0.64 |
| LPSN | LivePerson Inc | 5.11 | 1.28 | 0.25 |
| TYL | Tyler Technologies Inc | 0.03 | 0.55 | 0.54 |
| VRNT | Verint Systems Inc | 0.33 | 1.76 | 1.39 |
| Low | High | |
| Unlevered beta | 0.43 | 0.79 |
| Relevered beta | 0.45 | 0.82 |
| Adjusted relevered beta | 0.63 | 0.88 |
FICO'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 FICO:
cost_of_equity (8.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.63) + 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.