HQY
Healthequity Inc
Price:  
90.58 
USD
Volume:  
1,475,709.00
United States | Health Care Providers & Services
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HQY WACC - Weighted Average Cost of Capital

The WACC of Healthequity Inc (HQY) is 7.1%.

The Cost of Equity of Healthequity Inc (HQY) is 7.50%.
The Cost of Debt of Healthequity Inc (HQY) is 5.35%.

Range Selected
Cost of equity 6.50% - 8.50% 7.50%
Tax rate 29.10% - 32.30% 30.70%
Cost of debt 4.60% - 6.10% 5.35%
WACC 6.1% - 8.0% 7.1%
WACC

HQY WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.57 0.65
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.50% 8.50%
Tax rate 29.10% 32.30%
Debt/Equity ratio 0.13 0.13
Cost of debt 4.60% 6.10%
After-tax WACC 6.1% 8.0%
Selected WACC 7.1%

HQY'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 HQY:

cost_of_equity (7.50%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.57) + 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.