Plexus WACC - Weighted Average Cost of Capital

The WACC of Plexus Corp (PLXS) is 8.3%.

The Cost of Equity of Plexus Corp (PLXS) is 8.60%.

The Cost of Debt of Plexus Corp (PLXS) is 5.50%.

	Range	Selected
Cost of equity	6.80% - 10.40%	8.60%
Tax rate	13.50% - 13.60%	13.55%
Cost of debt	4.90% - 6.10%	5.50%
WACC	6.6% - 10.0%	8.3%

WACC

Plexus WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	0.63	0.98

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.80%	10.40%

Tax rate	13.50%	13.60%
Debt/Equity ratio	0.07	0.07
Cost of debt	4.90%	6.10%

After-tax WACC	6.6%	10.0%


Selected WACC	8.3%

Plexus'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 Plexus:

cost_of_equity (8.60%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.63) + 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.