The WACC of Pacific Biosciences of California Inc (PACB) is 8.4%.
Range | Selected | |
Cost of equity | 9.2% - 12.5% | 10.85% |
Tax rate | 0.1% - 1.5% | 0.8% |
Cost of debt | 7.0% - 7.0% | 7% |
WACC | 7.8% - 9.0% | 8.4% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 1.16 | 1.37 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 9.2% | 12.5% |
Tax rate | 0.1% | 1.5% |
Debt/Equity ratio | 1.67 | 1.67 |
Cost of debt | 7.0% | 7.0% |
After-tax WACC | 7.8% | 9.0% |
Selected WACC | 8.4% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
PACB | Pacific Biosciences of California Inc | 1.67 | 0.4 | 0.15 |
ARYC | Arrayit Corp | 1428.99 | -0.45 | 0 |
BIO | Bio Rad Laboratories Inc | 0.18 | 0.57 | 0.49 |
BLI | Berkeley Lights Inc | 0.42 | 0.99 | 0.7 |
BNGO | Bionano Genomics Inc | 0.34 | 1.71 | 1.28 |
IPA.V | Immunoprecise Antibodies Ltd | 0.02 | -0.15 | -0.15 |
LMNX | Luminex Corp | 0.12 | 0.57 | 0.51 |
MRVI | Maravai LifeSciences Holdings Inc | 0.52 | 1.05 | 0.69 |
RGEN | Repligen Corp | 0.08 | 0.86 | 0.8 |
TMO | Thermo Fisher Scientific Inc | 0.2 | 0.51 | 0.43 |
Low | High | |
Unlevered beta | 0.46 | 0.58 |
Relevered beta | 1.24 | 1.55 |
Adjusted relevered beta | 1.16 | 1.37 |
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 PACB:
cost_of_equity (10.85%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.16) + 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.