NEOG WACC - Weighted Average Cost of Capital
The WACC of Neogen Corp (NEOG) is 13.6%.
| Range | Selected | |
| Cost of equity | 7.1% - 10.0% | 8.55% |
| Tax rate | 18.6% - 19.4% | 19% |
| Cost of debt | 23.9% - 23.9% | 23.9% |
| WACC | 12.9% - 14.3% | 13.6% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.71 | 0.93 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.1% | 10.0% |
| Tax rate | 18.6% | 19.4% |
| Debt/Equity ratio | 0.87 | 0.87 |
| Cost of debt | 23.9% | 23.9% |
| After-tax WACC | 12.9% | 14.3% |
| Selected WACC | 13.6% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| NEOG | Neogen Corp | 0.87 | 0.83 | 0.49 |
| AVNS | Avanos Medical Inc | 0.24 | 0.58 | 0.49 |
| HAE | Haemonetics Corp | 0.35 | 0.79 | 0.62 |
| LUNG | Pulmonx Corp | 0.36 | 0.76 | 0.59 |
| MMSI | Merit Medical Systems Inc | 0.13 | 0.63 | 0.57 |
| OZSC | Ozop Energy Solutions Inc | 9.59 | 0.81 | 0.09 |
| SIEN | Sientra Inc | 26.62 | -1.12 | -0.05 |
| STAA | STAAR Surgical Co | 0 | 0.66 | 0.66 |
| TELA | TELA Bio Inc | 0.53 | 0.15 | 0.1 |
| UEEC | United Health Products Inc | 0.04 | -0.65 | -0.63 |
| Low | High | |
| Unlevered beta | 0.33 | 0.52 |
| Relevered beta | 0.57 | 0.9 |
| Adjusted relevered beta | 0.71 | 0.93 |
NEOG'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 NEOG:
cost_of_equity (8.55%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.71) + 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.