NKTX WACC - Weighted Average Cost of Capital
The WACC of Nkarta Inc (NKTX) is 9.0%.
| Range | Selected | |
| Cost of equity | 12.4% - 16.1% | 14.25% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 8.1% - 9.9% | 9.0% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.86 | 2.01 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 12.4% | 16.1% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 8.1% | 9.9% |
| Selected WACC | 9.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| NKTX | Nkarta Inc | 0.99 | 0.88 | 0.51 |
| ALEC | Alector Inc | 0.07 | 1.94 | 1.84 |
| ARQT | Arcutis Biotherapeutics Inc | 0.07 | 0.83 | 0.79 |
| CMPS | Compass Pathways PLC | 0.08 | 1.62 | 1.53 |
| DMTK | DermTech Inc | 0.03 | 2.09 | 2.05 |
| KURA | Kura Oncology Inc | 0.02 | 1.37 | 1.35 |
| OCGN | Ocugen Inc | 0.12 | 1.39 | 1.28 |
| QURE | Uniqure NV | 0.61 | 1.64 | 1.13 |
| REPL | Replimune Group Inc | 0.1 | 1.92 | 1.79 |
| VBIV | VBI Vaccines Inc | 13.32 | 1.21 | 0.11 |
| ZYME | Zymeworks Inc | 0 | 1.39 | 1.39 |
| Low | High | |
| Unlevered beta | 1.28 | 1.39 |
| Relevered beta | 2.28 | 2.51 |
| Adjusted relevered beta | 1.86 | 2.01 |
NKTX'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 NKTX:
cost_of_equity (14.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.86) + 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.