OPXS WACC - Weighted Average Cost of Capital
The WACC of Optex Systems Holdings Inc (OPXS) is 8.7%.
| Range | Selected | |
| Cost of equity | 7.4% - 10.2% | 8.8% |
| Tax rate | 19.5% - 21.5% | 20.5% |
| Cost of debt | 4.5% - 4.5% | 4.5% |
| WACC | 7.4% - 10.1% | 8.7% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.78 | 0.95 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.4% | 10.2% |
| Tax rate | 19.5% | 21.5% |
| Debt/Equity ratio | 0.02 | 0.02 |
| Cost of debt | 4.5% | 4.5% |
| After-tax WACC | 7.4% | 10.1% |
| Selected WACC | 8.7% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| OPXS | Optex Systems Holdings Inc | 0.02 | 0.7 | 0.69 |
| AZ.V | A2Z Smart Technologies Corp | 0.06 | 1.33 | 1.27 |
| BUKS | Butler National Corp | 0.41 | 1.34 | 1.01 |
| ETCC | Environmental Tectonics Corp | 1.02 | 1.08 | 0.6 |
| FLY.V | FLYHT Aerospace Solutions Ltd | 0.52 | -0.76 | -0.54 |
| GIGA | Giga-tronics Inc | 294.6 | -0.3 | 0 |
| ISSC | Innovative Solutions and Support Inc | 0.23 | 1.11 | 0.93 |
| MRS.V | Mission Ready Solutions Inc | 1.29 | 1.89 | 0.94 |
| TIKK | Tel-Instrument Electronics Corp | 0.08 | 0.37 | 0.35 |
| VTSI | VirTra Inc | 0.15 | 1.01 | 0.9 |
| Low | High | |
| Unlevered beta | 0.65 | 0.91 |
| Relevered beta | 0.67 | 0.93 |
| Adjusted relevered beta | 0.78 | 0.95 |
OPXS'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 OPXS:
cost_of_equity (8.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.78) + 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.