PEN WACC - Weighted Average Cost of Capital
The WACC of Penumbra Inc (PEN) is 8.3%.
| Range | Selected | |
| Cost of equity | 7.1% - 9.5% | 8.3% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 7.1% - 9.5% | 8.3% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.71 | 0.82 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.1% | 9.5% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 0 | 0 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 7.1% | 9.5% |
| Selected WACC | 8.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| PEN | Penumbra Inc | 0 | 0.42 | 0.42 |
| CNMD | Conmed Corp | 0.49 | 0.28 | 0.21 |
| GMED | Globus Medical Inc | 0.05 | 0.65 | 0.62 |
| IART | Integra Lifesciences Holdings Corp | 1.72 | 1.31 | 0.58 |
| LIVN | LivaNova PLC | 0.26 | 0.56 | 0.47 |
| MASI | Masimo Corp | 0.09 | 1.15 | 1.08 |
| NVCR | Novocure Ltd | 0.33 | 1.53 | 1.23 |
| NVRO | Nevro Corp | 1.02 | 1.56 | 0.9 |
| SWAV | Shockwave Medical Inc | 0.06 | 0.57 | 0.55 |
| TNDM | Tandem Diabetes Care Inc | 0.23 | 1.34 | 1.15 |
| Low | High | |
| Unlevered beta | 0.57 | 0.73 |
| Relevered beta | 0.57 | 0.73 |
| Adjusted relevered beta | 0.71 | 0.82 |
PEN'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 PEN:
cost_of_equity (8.30%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.71) + 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.