LX WACC - Weighted Average Cost of Capital
The WACC of Lexinfintech Holdings Ltd (LX) is 7.6%.
| Range | Selected | |
| Cost of equity | 7.8% - 11.7% | 9.75% |
| Tax rate | 17.5% - 19.1% | 18.3% |
| Cost of debt | 4.0% - 4.5% | 4.25% |
| WACC | 6.3% - 9.0% | 7.6% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.85 | 1.22 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.8% | 11.7% |
| Tax rate | 17.5% | 19.1% |
| Debt/Equity ratio | 0.5 | 0.5 |
| Cost of debt | 4.0% | 4.5% |
| After-tax WACC | 6.3% | 9.0% |
| Selected WACC | 7.6% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| LX | Lexinfintech Holdings Ltd | 0.5 | 1.34 | 0.95 |
| ATLC | Atlanticus Holdings Corp | 3.46 | 1.68 | 0.44 |
| ELVT | Elevate Credit Inc | 8.59 | 2.09 | 0.26 |
| HX | Xiaobai Maimai Inc | 0.18 | 1.4 | 1.22 |
| MFIN | Medallion Financial Corp | 1.31 | 0.46 | 0.22 |
| MIT.V | Mint Corp | 0.05 | 1.9 | 1.83 |
| QFIN | 360 DigiTech Inc | 0.03 | 1.32 | 1.28 |
| RM | Regional Management Corp | 5.57 | 0.99 | 0.18 |
| WEI | Weidai Ltd | 0.01 | 0.63 | 0.63 |
| WRLD | World Acceptance Corp | 0.6 | 1.39 | 0.93 |
| Low | High | |
| Unlevered beta | 0.55 | 0.94 |
| Relevered beta | 0.78 | 1.33 |
| Adjusted relevered beta | 0.85 | 1.22 |
LX'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 LX:
cost_of_equity (9.75%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.85) + 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.