The WACC of Quantum Corp (QMCO) is 9.1%.
Range | Selected | |
Cost of equity | 9.1% - 12.6% | 10.85% |
Tax rate | 3.2% - 4.6% | 3.9% |
Cost of debt | 4.9% - 11.8% | 8.35% |
WACC | 6.4% - 11.8% | 9.1% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 1.15 | 1.38 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 9.1% | 12.6% |
Tax rate | 3.2% | 4.6% |
Debt/Equity ratio | 1.73 | 1.73 |
Cost of debt | 4.9% | 11.8% |
After-tax WACC | 6.4% | 11.8% |
Selected WACC | 9.1% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
QMCO | Quantum Corp | 1.73 | 2.13 | 0.8 |
ALOT | AstroNova Inc | 0.67 | 0.71 | 0.43 |
CAN | Canaan Inc | 0.02 | 1.13 | 1.11 |
IGOI | iGO Inc | 0.92 | 0.89 | 0.47 |
OSS | One Stop Systems Inc | 0.01 | 1.45 | 1.43 |
OTIVF | On Track Innovations Ltd | 1.95 | 0.81 | 0.28 |
SCKT | Socket Mobile Inc | 0.44 | 0.82 | 0.58 |
TACT | TransAct Technologies Inc | 0.08 | 0.65 | 0.6 |
TTD.V | Tinkerine Studios Ltd | 0.37 | 0.97 | 0.72 |
VIDE | Video Display Corp | 1215.42 | -0.64 | 0 |
Low | High | |
Unlevered beta | 0.54 | 0.65 |
Relevered beta | 1.22 | 1.57 |
Adjusted relevered beta | 1.15 | 1.38 |
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 Quantum:
cost_of_equity (10.85%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.15) + 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.