LUNG WACC - Weighted Average Cost of Capital
The WACC of Pulmonx Corp (LUNG) is 8.5%.
| Range | Selected | |
| Cost of equity | 6.9% - 10.5% | 8.7% |
| Tax rate | 0.7% - 0.8% | 0.75% |
| Cost of debt | 7.0% - 8.9% | 7.95% |
| WACC | 6.9% - 10.1% | 8.5% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.66 | 1.01 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.9% | 10.5% |
| Tax rate | 0.7% | 0.8% |
| Debt/Equity ratio | 0.36 | 0.36 |
| Cost of debt | 7.0% | 8.9% |
| After-tax WACC | 6.9% | 10.1% |
| Selected WACC | 8.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| LUNG | Pulmonx Corp | 0.36 | 0.76 | 0.56 |
| ARTH | Arch Therapeutics Inc | 1267524.8 | 1.23 | 0 |
| BLFS | BioLife Solutions Inc | 0.02 | 1.44 | 1.42 |
| CERS | Cerus Corp | 0.31 | 1.86 | 1.43 |
| KIDS | OrthoPediatrics Corp | 0.14 | 0.66 | 0.58 |
| OZSC | Ozop Energy Solutions Inc | 9.59 | 0.81 | 0.08 |
| SENS | Senseonics Holdings Inc | 0.14 | 1.73 | 1.52 |
| SIBN | SI-BONE Inc | 0.05 | 1.06 | 1.02 |
| SIEN | Sientra Inc | 26.62 | -1.12 | -0.04 |
| UEEC | United Health Products Inc | 0.04 | -0.65 | -0.62 |
| Low | High | |
| Unlevered beta | 0.37 | 0.75 |
| Relevered beta | 0.49 | 1.01 |
| Adjusted relevered beta | 0.66 | 1.01 |
LUNG'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 LUNG:
cost_of_equity (8.70%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.66) + 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.