SGSI WACC - Weighted Average Cost of Capital
The WACC of Spectrum Global Solutions Inc (SGSI) is 7.1%.
| Range | Selected | |
| Cost of equity | 5.1% - 7.8% | 6.45% |
| Tax rate | 0.0% - 1.7% | 0.85% |
| Cost of debt | 7.0% - 9.9% | 8.45% |
| WACC | 5.8% - 8.5% | 7.1% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 0.35 | 0.6 |
| Additional risk adjustments | 0.5% | 1.0% |
| Cost of equity | 5.1% | 7.8% |
| Tax rate | 0.0% | 1.7% |
| Debt/Equity ratio | 0.54 | 0.54 |
| Cost of debt | 7.0% | 9.9% |
| After-tax WACC | 5.8% | 8.5% |
| Selected WACC | 7.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| SGSI | Spectrum Global Solutions Inc | 0.54 | -0.77 | -0.5 |
| CLGX | Corelogic Inc | 0.32 | 1.14 | 0.87 |
| CLVT | CLARIVATE PLC | 1.57 | 0.67 | 0.26 |
| ENCC | Encompass Compliance Corp | 12.48 | 1.8 | 0.13 |
| INNI | Innovaro Inc | 31.46 | 2.24 | 0.07 |
| QPRC | Quest Patent Research Corp | 16.22 | -1.17 | -0.07 |
| RCRT | Recruiter.Com Group Inc | 0.1 | -0.02 | -0.02 |
| STWC | STWC Holdings Inc | 4505.53 | 33.48 | 0.01 |
| TRU | TransUnion | 0.31 | 1.61 | 1.23 |
| WFCF | Where Food Comes From Inc | 0 | -0.15 | -0.15 |
| Low | High | |
| Unlevered beta | 0 | 0.09 |
| Relevered beta | 0.03 | 0.4 |
| Adjusted relevered beta | 0.35 | 0.6 |
SGSI'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 SGSI:
cost_of_equity (6.45%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (0.35) + risk_adjustments (0.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.