REPH WACC - Weighted Average Cost of Capital
The WACC of Recro Pharma Inc (REPH) is 11.5%.
| Range | Selected | |
| Cost of equity | 7.3% - 13.1% | 10.2% |
| Tax rate | 27.0% - 27.0% | 27% |
| Cost of debt | 14.2% - 20.6% | 17.4% |
| WACC | 8.9% - 14.1% | 11.5% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 0.99 | 1.7 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.3% | 13.1% |
| Tax rate | 27.0% | 27.0% |
| Debt/Equity ratio | 0.99 | 0.99 |
| Cost of debt | 14.2% | 20.6% |
| After-tax WACC | 8.9% | 14.1% |
| Selected WACC | 11.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| REPH | Recro Pharma Inc | 0.99 | 1.09 | 0.63 |
| CHME | China Medicine Corp | 1997.09 | -5.76 | 0 |
| CTLT | Catalent Inc | 0.43 | 0.41 | 0.31 |
| ELTP | Elite Pharmaceuticals Inc | 0.01 | 1.79 | 1.78 |
| EYPT | EyePoint Pharmaceuticals Inc | 0.96 | 2.05 | 1.21 |
| OPNT | Opiant Pharmaceuticals Inc | 0.15 | 0.85 | 0.77 |
| OTIC | Otonomy Inc | 2.47 | 1.53 | 0.55 |
| PRTT | Protect Pharmaceutical Corp | 0 | 0.67 | 0.67 |
| VDRM | Viaderma Inc | 20.75 | -1.72 | -0.11 |
| XERS | Xeris Pharmaceuticals Inc | 0.31 | 1.16 | 0.95 |
| Low | High | |
| Unlevered beta | 0.6 | 0.71 |
| Relevered beta | 0.99 | 2.04 |
| Adjusted relevered beta | 0.99 | 1.7 |
REPH'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 REPH:
cost_of_equity (10.20%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (0.99) + 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.