NPTN WACC - Weighted Average Cost of Capital
The WACC of NeoPhotonics Corp (NPTN) is 7.4%.
| Range | Selected | |
| Cost of equity | 6.2% - 8.8% | 7.5% |
| Tax rate | 8.0% - 21.2% | 14.6% |
| Cost of debt | 4.0% - 7.0% | 5.5% |
| WACC | 6.1% - 8.6% | 7.4% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.52 | 0.7 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.2% | 8.8% |
| Tax rate | 8.0% | 21.2% |
| Debt/Equity ratio | 0.05 | 0.05 |
| Cost of debt | 4.0% | 7.0% |
| After-tax WACC | 6.1% | 8.6% |
| Selected WACC | 7.4% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| NPTN | NeoPhotonics Corp | 0.05 | 0.75 | 0.72 |
| DSPG | Dsp Group Inc | 0 | 0.9 | 0.9 |
| JKS | JinkoSolar Holding Co Ltd | 8.34 | 0.7 | 0.08 |
| LEDS | SemiLEDs Corp | 0.16 | 0.25 | 0.22 |
| MX | MagnaChip Semiconductor Corp | 0.19 | 1.37 | 1.18 |
| PI | Impinj Inc | 0.08 | 1.98 | 1.85 |
| PTK.V | POET Technologies Inc | 0 | 0.3 | 0.3 |
| SEV.V | Spectra7 Microsystems Inc | 7.07 | 0.94 | 0.13 |
| SODI | Solitron Devices Inc | 0.13 | 0.07 | 0.06 |
| SQNS | Sequans Communications SA | 1.69 | 0.98 | 0.39 |
| Low | High | |
| Unlevered beta | 0.27 | 0.52 |
| Relevered beta | 0.28 | 0.55 |
| Adjusted relevered beta | 0.52 | 0.7 |
NPTN'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 NPTN:
cost_of_equity (7.50%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.52) + 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.