MTEM WACC - Weighted Average Cost of Capital
The WACC of Molecular Templates Inc (MTEM) is 10.2%.
| Range | Selected | |
| Cost of equity | 7.1% - 11.0% | 9.05% |
| Tax rate | 0.0% - 0.0% | 0% |
| Cost of debt | 7.0% - 15.6% | 11.3% |
| WACC | 7.0% - 13.3% | 10.2% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.7 | 1.09 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.1% | 11.0% |
| Tax rate | 0.0% | 0.0% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 7.0% | 15.6% |
| After-tax WACC | 7.0% | 13.3% |
| Selected WACC | 10.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| MTEM | Molecular Templates Inc | 0.94 | -313.66 | -161.56 |
| ABBV | Abbvie Inc | 0.2 | 0.33 | 0.27 |
| ALBO | Albireo Pharma Inc | 0.01 | 0.81 | 0.8 |
| AMGN | Amgen Inc | 0.39 | 0.37 | 0.26 |
| ARDX | Ardelyx Inc | 0.17 | 0.31 | 0.27 |
| DTIL | Precision BioSciences Inc | 0.42 | 0.06 | 0.04 |
| GILD | Gilead Sciences Inc | 0.2 | 0.33 | 0.28 |
| MIRM | Mirum Pharmaceuticals Inc | 0.14 | 0.73 | 0.64 |
| MREO | Mereo BioPharma Group plc | 0.02 | 0.88 | 0.86 |
| SLDB | Solid Biosciences Inc | 0 | 2.07 | 2.06 |
| 950220.KQ | Neoimmunetech Inc (Pre-reincorporation) | 0 | 0.52 | 0.52 |
| Low | High | |
| Unlevered beta | 0.27 | 0.52 |
| Relevered beta | 0.55 | 1.13 |
| Adjusted relevered beta | 0.7 | 1.09 |
MTEM'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 MTEM:
cost_of_equity (9.05%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.7) + 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.