HSTM
HealthStream Inc
Price:  
27.8 
USD
Volume:  
46,131
United States | Health Care Technology

HSTM WACC - Weighted Average Cost of Capital

The WACC of HealthStream Inc (HSTM) is 6.7%.

The Cost of Equity of HealthStream Inc (HSTM) is 9.85%.
The Cost of Debt of HealthStream Inc (HSTM) is 4.5%.

RangeSelected
Cost of equity8.0% - 11.7%9.85%
Tax rate20.2% - 21.4%20.8%
Cost of debt4.5% - 4.5%4.5%
WACC5.8% - 7.6%6.7%
WACC

HSTM WACC calculation

CategoryLowHigh
Long-term bond rate3.9%4.4%
Equity market risk premium4.6%5.6%
Adjusted beta0.91.22
Additional risk adjustments0.0%0.5%
Cost of equity8.0%11.7%
Tax rate20.2%21.4%
Debt/Equity ratio
11
Cost of debt4.5%4.5%
After-tax WACC5.8%7.6%
Selected WACC6.7%

HSTM'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 HSTM:

cost_of_equity (9.85%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.9) + 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.