IIVI WACC - Weighted Average Cost of Capital
The WACC of II-VI Inc (IIVI) is 9.3%.
| Range | Selected | |
| Cost of equity | 9.9% - 12.8% | 11.35% |
| Tax rate | 16.2% - 16.6% | 16.4% |
| Cost of debt | 4.2% - 6.5% | 5.35% |
| WACC | 8.0% - 10.6% | 9.3% |
| Category | Low | High |
| Long-term bond rate | 4.2% | 4.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 1.35 | 1.44 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.9% | 12.8% |
| Tax rate | 16.2% | 16.6% |
| Debt/Equity ratio | 0.42 | 0.42 |
| Cost of debt | 4.2% | 6.5% |
| After-tax WACC | 8.0% | 10.6% |
| Selected WACC | 9.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| IIVI | II-VI Inc | 0.42 | 1.46 | 1.08 |
| AKTS | Akoustis Technologies Inc | 52.41 | 2.22 | 0.05 |
| BDC | Belden Inc | 0.26 | 1.34 | 1.1 |
| BELFA | Bel Fuse Inc | 0.33 | 1.36 | 1.06 |
| CPSH | CPS Technologies Corp | 0 | 0.59 | 0.59 |
| DGNG | Diguang International Development Co Ltd | 25.31 | -3.03 | -0.14 |
| KN | Knowles Corp | 0.14 | 1.72 | 1.54 |
| LFUS | Littelfuse Inc | 0.16 | 1.71 | 1.51 |
| ROG | Rogers Corp | 0 | 1.09 | 1.09 |
| VSH | Vishay Intertechnology Inc | 0.44 | 1.66 | 1.21 |
| Low | High | |
| Unlevered beta | 1.07 | 1.09 |
| Relevered beta | 1.52 | 1.66 |
| Adjusted relevered beta | 1.35 | 1.44 |
IIVI'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 IIVI:
cost_of_equity (11.35%) = risk_free_rate (4.45%) + equity_risk_premium (4.70%) * adjusted_beta (1.35) + 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.