RP WACC - Weighted Average Cost of Capital
The WACC of RealPage Inc (RP) is 8.2%.
| Range | Selected | |
| Cost of equity | 7.6% - 9.9% | 8.75% |
| Tax rate | 7.4% - 21.6% | 14.5% |
| Cost of debt | 4.0% - 5.5% | 4.75% |
| WACC | 7.1% - 9.3% | 8.2% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 1.04 | 1.1 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.6% | 9.9% |
| Tax rate | 7.4% | 21.6% |
| Debt/Equity ratio | 0.14 | 0.14 |
| Cost of debt | 4.0% | 5.5% |
| After-tax WACC | 7.1% | 9.3% |
| Selected WACC | 8.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| RP | RealPage Inc | 0.14 | 1.14 | 1.02 |
| AVLR | Avalara Inc | 1.73 | 0.98 | 0.38 |
| DBX | Dropbox Inc | 0.34 | 0.77 | 0.59 |
| ESTC | Elastic NV | 0.07 | 1.66 | 1.57 |
| FIVN | Five9 Inc | 0.59 | 1.58 | 1.03 |
| GWRE | Guidewire Software Inc | 0.02 | 0.82 | 0.8 |
| JCOM | j2 Global Inc | 0.23 | 1.03 | 0.85 |
| MSTR | MicroStrategy Inc | 0.07 | 1.1 | 1.03 |
| NTNX | Nutanix Inc | 0.03 | 1.41 | 1.38 |
| PEGA | Pegasystems Inc | 0.06 | 1.26 | 1.2 |
| Low | High | |
| Unlevered beta | 0.95 | 1.03 |
| Relevered beta | 1.06 | 1.15 |
| Adjusted relevered beta | 1.04 | 1.1 |
RP'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 RP:
cost_of_equity (8.75%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (1.04) + 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.