The WACC of Organogenesis Holdings Inc (ORGO) is 8.6%.
Range | Selected | |
Cost of equity | 7.3% - 9.9% | 8.6% |
Tax rate | 26.2% - 27.0% | 26.6% |
Cost of debt | 5.3% - 6.3% | 5.8% |
WACC | 7.3% - 9.8% | 8.6% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 0.76 | 0.89 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 7.3% | 9.9% |
Tax rate | 26.2% | 27.0% |
Debt/Equity ratio | 0 | 0 |
Cost of debt | 5.3% | 6.3% |
After-tax WACC | 7.3% | 9.8% |
Selected WACC | 8.6% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
ORGO | Organogenesis Holdings Inc | 0 | 1.88 | 1.87 |
ABBV | Abbvie Inc | 0.21 | 0.35 | 0.31 |
AMGN | Amgen Inc | 0.42 | 0.35 | 0.27 |
GILD | Gilead Sciences Inc | 0.22 | 0.32 | 0.27 |
INSM | Insmed Inc | 0.1 | 0.85 | 0.8 |
MDGL | Madrigal Pharmaceuticals Inc | 0.02 | 0.39 | 0.39 |
MYGN | Myriad Genetics Inc | 0.11 | 0.9 | 0.83 |
TVTX | Travere Therapeutics Inc | 0.21 | 1.88 | 1.63 |
VCEL | Vericel Corp | 0 | 0.85 | 0.85 |
XNCR | Xencor Inc | 0.28 | 1.96 | 1.63 |
Low | High | |
Unlevered beta | 0.63 | 0.84 |
Relevered beta | 0.64 | 0.84 |
Adjusted relevered beta | 0.76 | 0.89 |
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 ORGO:
cost_of_equity (8.60%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.76) + 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.