The WACC of Loyalty Ventures Inc (LYLT) is 5.8%.
| Range | Selected | |
| Cost of equity | 536.80% - 897.10% | 716.95% |
| Tax rate | 20.60% - 38.60% | 29.60% |
| Cost of debt | 4.90% - 4.90% | 4.90% |
| WACC | 5.6% - 5.9% | 5.8% |
| Category | Low | High |
| Long-term bond rate | 4.2% | 4.7% |
| Equity market risk premium | 5.0% | 6.0% |
| Adjusted beta | 106.53 | 148.66 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 536.80% | 897.10% |
| Tax rate | 20.60% | 38.60% |
| Debt/Equity ratio | 309.39 | 309.39 |
| Cost of debt | 4.90% | 4.90% |
| After-tax WACC | 5.6% | 5.9% |
| Selected WACC | 5.8% | |
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 LYLT:
cost_of_equity (716.95%) = risk_free_rate (4.45%) + equity_risk_premium (5.50%) * adjusted_beta (106.53) + 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.