IPGP
IPG Photonics Corp
Price:  
66.01 
USD
Volume:  
673,291.00
United States | Electronic Equipment, Instruments & Components
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IPGP WACC - Weighted Average Cost of Capital

The WACC of IPG Photonics Corp (IPGP) is 7.0%.

The Cost of Equity of IPG Photonics Corp (IPGP) is 10.45%.
The Cost of Debt of IPG Photonics Corp (IPGP) is 4.50%.

Range Selected
Cost of equity 8.00% - 12.90% 10.45%
Tax rate 21.40% - 22.90% 22.15%
Cost of debt 4.50% - 4.50% 4.50%
WACC 5.7% - 8.2% 7.0%
WACC

IPGP WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.89 1.43
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.00% 12.90%
Tax rate 21.40% 22.90%
Debt/Equity ratio 1 1
Cost of debt 4.50% 4.50%
After-tax WACC 5.7% 8.2%
Selected WACC 7.0%

IPGP'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 IPGP:

cost_of_equity (10.45%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.89) + 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.