NPTN
NeoPhotonics Corp
Price:  
16.01 
USD
Volume:  
1,745,290.00
United States | Semiconductors & Semiconductor Equipment
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NPTN WACC - Weighted Average Cost of Capital

The WACC of NeoPhotonics Corp (NPTN) is 8.1%.

The Cost of Equity of NeoPhotonics Corp (NPTN) is 8.25%.
The Cost of Debt of NeoPhotonics Corp (NPTN) is 5.50%.

Range Selected
Cost of equity 7.00% - 9.50% 8.25%
Tax rate 8.00% - 21.20% 14.60%
Cost of debt 4.00% - 7.00% 5.50%
WACC 6.9% - 9.3% 8.1%
WACC

NPTN WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.69 0.83
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.00% 9.50%
Tax rate 8.00% 21.20%
Debt/Equity ratio 0.05 0.05
Cost of debt 4.00% 7.00%
After-tax WACC 6.9% 9.3%
Selected WACC 8.1%

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 (8.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.69) + 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.