LTRE WACC - Weighted Average Cost of Capital
The WACC of Learning Tree International Inc (LTRE) is 6.2%.
| Range | Selected | |
| Cost of equity | 5.4% - 7.0% | 6.2% |
| Tax rate | 6.1% - 15.5% | 10.8% |
| Cost of debt | 7.0% - 7.0% | 7% |
| WACC | 5.7% - 6.7% | 6.2% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.33 | 0.38 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.4% | 7.0% |
| Tax rate | 6.1% | 15.5% |
| Debt/Equity ratio | 0.31 | 0.31 |
| Cost of debt | 7.0% | 7.0% |
| After-tax WACC | 5.7% | 6.7% |
| Selected WACC | 6.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| LTRE | Learning Tree International Inc | 0.31 | 0.92 | 0.71 |
| CLCN | Creative Learning Corp | 0.18 | -0.32 | -0.27 |
| EDTK | Skillful Craftsman Education Technology Ltd | 0.96 | -0.15 | -0.08 |
| EVCI | EVCI Career Colleges Holding Corp | 25.8 | 0.49 | 0.02 |
| LEAI | Legacy Education Alliance Inc | 1723.26 | -2.06 | 0 |
| MBA.TO | CIBT Education Group Inc | 11.24 | 1.19 | 0.1 |
| METX | Meten Edtechx Education Group Ltd | 15.18 | 1.61 | 0.11 |
| NEW | Puxin Ltd | 11.42 | 1.68 | 0.14 |
| ONE | OneSmart International Education Group Ltd | 34.06 | 0.09 | 0 |
| TEDU | Tarena International Inc | 0.58 | -0.28 | -0.18 |
| Low | High | |
| Unlevered beta | 0 | 0.05 |
| Relevered beta | 0 | 0.07 |
| Adjusted relevered beta | 0.33 | 0.38 |
LTRE'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 LTRE:
cost_of_equity (6.20%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.33) + 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.