MEG
Montrose Environmental Group Inc
Price:  
22.31 
USD
Volume:  
113,705
United States | Commercial Services & Supplies

MEG WACC - Weighted Average Cost of Capital

The WACC of Montrose Environmental Group Inc (MEG) is 6.8%.

The Cost of Equity of Montrose Environmental Group Inc (MEG) is 7.2%.
The Cost of Debt of Montrose Environmental Group Inc (MEG) is 5.95%.

RangeSelected
Cost of equity6.1% - 8.3%7.2%
Tax rate5.6% - 7.4%6.5%
Cost of debt4.9% - 7.0%5.95%
WACC5.7% - 7.9%6.8%
WACC

MEG WACC calculation

CategoryLowHigh
Long-term bond rate3.9%4.4%
Equity market risk premium4.6%5.6%
Adjusted beta0.480.61
Additional risk adjustments0.0%0.5%
Cost of equity6.1%8.3%
Tax rate5.6%7.4%
Debt/Equity ratio
0.320.32
Cost of debt4.9%7.0%
After-tax WACC5.7%7.9%
Selected WACC6.8%

MEG'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 MEG:

cost_of_equity (7.20%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.48) + 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.