The WACC of National Instruments Corp (NATI) is 9.4%.
Range | Selected | |
Cost of equity | 8.5% - 11.1% | 9.8% |
Tax rate | 14.2% - 16.2% | 15.2% |
Cost of debt | 4.5% - 4.5% | 4.5% |
WACC | 8.2% - 10.7% | 9.4% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 1 | 1.12 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 8.5% | 11.1% |
Tax rate | 14.2% | 16.2% |
Debt/Equity ratio | 0.07 | 0.07 |
Cost of debt | 4.5% | 4.5% |
After-tax WACC | 8.2% | 10.7% |
Selected WACC | 9.4% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
NATI | National Instruments Corp | 0.07 | 0.97 | 0.91 |
CRAWA | Crawford United Corp | 0.05 | 0.27 | 0.26 |
FLIR | FLIR Systems Inc | 0.1 | 1.56 | 1.44 |
HOLI | Hollysys Automation Technologies Ltd | 0.02 | 0.62 | 0.61 |
ITRI | Itron Inc | 0.2 | 0.98 | 0.84 |
LPTH | LightPath Technologies Inc | 0.01 | 1.1 | 1.1 |
MICT | MICT Inc | 0.01 | 1.14 | 1.13 |
MVIS | MicroVision Inc | 0.11 | 1.06 | 0.96 |
NOVT | Novanta Inc | 0.09 | 1.53 | 1.42 |
OSIS | OSI Systems Inc | 0.15 | 1.52 | 1.35 |
Low | High | |
Unlevered beta | 0.94 | 1.11 |
Relevered beta | 1 | 1.18 |
Adjusted relevered beta | 1 | 1.12 |
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 NATI:
cost_of_equity (9.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1) + 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.