The WACC of Selecta Biosciences Inc (SELB) is 10.3%.
Range | Selected | |
Cost of equity | 9.8% - 12.9% | 11.35% |
Tax rate | 26.2% - 27.0% | 26.6% |
Cost of debt | 7.0% - 7.0% | 7% |
WACC | 9.1% - 11.6% | 10.3% |
Category | Low | High |
Long-term bond rate | 4.2% | 4.7% |
Equity market risk premium | 5.0% | 6.0% |
Adjusted beta | 1.13 | 1.29 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 9.8% | 12.9% |
Tax rate | 26.2% | 27.0% |
Debt/Equity ratio | 0.19 | 0.19 |
Cost of debt | 7.0% | 7.0% |
After-tax WACC | 9.1% | 11.6% |
Selected WACC | 10.3% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
SELB | Selecta Biosciences Inc | 0.19 | 0.78 | 0.68 |
AVRO | AVROBIO Inc | 0.8 | 1.01 | 0.64 |
BCYC | Bicycle Therapeutics PLC | 0 | 1.74 | 1.74 |
ETNB | 89Bio Inc | 0.02 | 1.68 | 1.65 |
GERN | Geron Corp | 0.12 | 1.39 | 1.27 |
GMDA | Gamida Cell Ltd | 17.12 | 0.77 | 0.06 |
ISEE | Iveric Bio Inc | 0.02 | 2.01 | 1.99 |
MRNA | Moderna Inc | 0.01 | 0.96 | 0.95 |
NLTX | Neoleukin Therapeutics Inc | 0.01 | -0.35 | -0.35 |
SYRS | Syros Pharmaceuticals Inc | 54.48 | 2.18 | 0.05 |
Low | High | |
Unlevered beta | 0.66 | 1.08 |
Relevered beta | 1.19 | 1.43 |
Adjusted relevered beta | 1.13 | 1.29 |
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 SELB:
cost_of_equity (11.35%) = risk_free_rate (4.45%) + equity_risk_premium (5.50%) * adjusted_beta (1.13) + 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.