ORGO WACC - Weighted Average Cost of Capital
The WACC of Organogenesis Holdings Inc (ORGO) is 8.5%.
| Range | Selected | |
| Cost of equity | 7.3% - 9.8% | 8.55% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 5.3% - 6.3% | 5.8% |
| WACC | 7.3% - 9.8% | 8.5% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.74 | 0.89 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.3% | 9.8% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 0.01 | 0.01 |
| Cost of debt | 5.3% | 6.3% |
| After-tax WACC | 7.3% | 9.8% |
| Selected WACC | 8.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| ORGO | Organogenesis Holdings Inc | 0.01 | 1.78 | 1.77 |
| ABBV | Abbvie Inc | 0.21 | 0.33 | 0.29 |
| AMGN | Amgen Inc | 0.41 | 0.38 | 0.29 |
| CHRS | Coherus BioSciences Inc | 3.35 | 0.83 | 0.24 |
| GILD | Gilead Sciences Inc | 0.2 | 0.38 | 0.33 |
| INSM | Insmed Inc | 0.09 | 0.89 | 0.83 |
| MYGN | Myriad Genetics Inc | 0.11 | 0.9 | 0.83 |
| TVTX | Travere Therapeutics Inc | 0.27 | 1.52 | 1.27 |
| VCEL | Vericel Corp | 0 | 0.8 | 0.8 |
| XNCR | Xencor Inc | 0.3 | 1.87 | 1.53 |
| Low | High | |
| Unlevered beta | 0.61 | 0.83 |
| Relevered beta | 0.61 | 0.84 |
| Adjusted relevered beta | 0.74 | 0.89 |
ORGO'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 ORGO:
cost_of_equity (8.55%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.74) + 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.