The WACC of Radcom Ltd (RDCM) is 7.9%.
Range | Selected | |
Cost of equity | 8.9% - 13.0% | 10.95% |
Tax rate | 4.0% - 5.1% | 4.55% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 6.8% - 8.9% | 7.9% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 1.09 | 1.45 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 8.9% | 13.0% |
Tax rate | 4.0% | 5.1% |
Debt/Equity ratio | 1 | 1 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 6.8% | 8.9% |
Selected WACC | 7.9% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
RDCM | Radcom Ltd | 0.89 | 0.51 | 0.27 |
CMI.V | C-Com Satellite Systems Inc | 0.04 | 0.89 | 0.87 |
FRTN | Fortran Corp | 2.52 | 1.69 | 0.5 |
GNSS | Genasys Inc | 0.15 | 1.43 | 1.25 |
LTRX | Lantronix Inc | 0.14 | 0.96 | 0.84 |
ONDS | Ondas Holdings Inc | 0.17 | 1.53 | 1.32 |
RDL.TO | Redline Communications Group Inc | 0.56 | 0.68 | 0.45 |
RESN | Resonant Inc | 0 | 1.25 | 1.25 |
TTZ.V | Total Telcom Inc | 0.07 | 0.67 | 0.63 |
VISL | Vislink Technologies Inc | 0.01 | 0.53 | 0.52 |
VSAT | ViaSat Inc | 3.35 | 0.45 | 0.11 |
Low | High | |
Unlevered beta | 0.52 | 0.84 |
Relevered beta | 1.13 | 1.67 |
Adjusted relevered beta | 1.09 | 1.45 |
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 RDCM:
cost_of_equity (10.95%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.09) + 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.