SILK WACC - Weighted Average Cost of Capital
The WACC of Silk Road Medical Inc (SILK) is 7.8%.
| Range | Selected | |
| Cost of equity | 6.5% - 9.4% | 7.95% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 7.0% - 9.5% | 8.25% |
| WACC | 6.4% - 9.2% | 7.8% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.58 | 0.81 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.5% | 9.4% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 0.07 | 0.07 |
| Cost of debt | 7.0% | 9.5% |
| After-tax WACC | 6.4% | 9.2% |
| Selected WACC | 7.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| SILK | Silk Road Medical Inc | 0.07 | 2.41 | 2.3 |
| ARTH | Arch Therapeutics Inc | 1267524.8 | 1.23 | 0 |
| BLFS | BioLife Solutions Inc | 0.01 | 1.49 | 1.48 |
| CERS | Cerus Corp | 0.33 | 1.9 | 1.53 |
| KIDS | OrthoPediatrics Corp | 0.13 | 0.54 | 0.49 |
| LUNG | Pulmonx Corp | 0.27 | 0.66 | 0.55 |
| OZSC | Ozop Energy Solutions Inc | 7.55 | 1 | 0.15 |
| SENS | Senseonics Holdings Inc | 0.16 | 2.1 | 1.88 |
| SIBN | SI-BONE Inc | 0.04 | 0.89 | 0.87 |
| SIEN | Sientra Inc | 26.62 | -1.12 | -0.05 |
| UEEC | United Health Products Inc | 0.02 | -0.9 | -0.88 |
| Low | High | |
| Unlevered beta | 0.49 | 0.87 |
| Relevered beta | 0.37 | 0.72 |
| Adjusted relevered beta | 0.58 | 0.81 |
SILK'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 SILK:
cost_of_equity (7.95%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.58) + 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.