The WACC of Mimecast Ltd (MIME) is 7.9%.
Range | Selected | |
Cost of equity | 6.9% - 9.0% | 7.95% |
Tax rate | 27.0% - 27.0% | 27% |
Cost of debt | 4.0% - 9.8% | 6.9% |
WACC | 6.9% - 9.0% | 7.9% |
Category | Low | High |
Long-term bond rate | 3.2% | 3.7% |
Equity market risk premium | 4.2% | 5.2% |
Adjusted beta | 0.89 | 0.92 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.9% | 9.0% |
Tax rate | 27.0% | 27.0% |
Debt/Equity ratio | 0.02 | 0.02 |
Cost of debt | 4.0% | 9.8% |
After-tax WACC | 6.9% | 9.0% |
Selected WACC | 7.9% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
MIME | Mimecast Ltd | 0.02 | 1.35 | 1.33 |
BLKB | Blackbaud Inc | 0.35 | 0.62 | 0.5 |
CGNT | Cognyte Software Ltd | 0 | 0.19 | 0.19 |
EGHT | 8x8 Inc | 1.35 | 1.75 | 0.88 |
ENGH.TO | Enghouse Systems Ltd | 0.01 | 0.61 | 0.6 |
KXS.TO | Kinaxis Inc | 0.01 | 0.79 | 0.79 |
MTLS | Materialise NV | 0.14 | 1.17 | 1.06 |
SVMK | SVMK Inc | 0.07 | 0.96 | 0.92 |
UPLD | Upland Software Inc | 5.31 | 1.88 | 0.39 |
VERX | Vertex Inc | 0.06 | 0.99 | 0.95 |
Low | High | |
Unlevered beta | 0.71 | 0.9 |
Relevered beta | 0.84 | 0.88 |
Adjusted relevered beta | 0.89 | 0.92 |
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 MIME:
cost_of_equity (7.95%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (0.89) + 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.