SIMO WACC - Weighted Average Cost of Capital
The WACC of Silicon Motion Technology Corp (SIMO) is 8.3%.
| Range | Selected | |
| Cost of equity | 10.0% - 15.0% | 12.5% |
| Tax rate | 15.5% - 17.7% | 16.6% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 7.1% - 9.5% | 8.3% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.34 | 1.8 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.0% | 15.0% |
| Tax rate | 15.5% | 17.7% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 7.1% | 9.5% |
| Selected WACC | 8.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| SIMO | Silicon Motion Technology Corp | 0.82 | 1.86 | 1.1 |
| ASTI | Ascent Solar Technologies Inc | 0.01 | 0.35 | 0.35 |
| DSPG | Dsp Group Inc | 0 | 0.9 | 0.9 |
| EMAN | eMagin Corp | 0.09 | 1.49 | 1.38 |
| JKS | JinkoSolar Holding Co Ltd | 7.22 | 0.81 | 0.12 |
| MTSI | MACOM Technology Solutions Holdings Inc | 0.05 | 1.73 | 1.67 |
| MX | MagnaChip Semiconductor Corp | 0.19 | 1.75 | 1.51 |
| NPTN | NeoPhotonics Corp | 0.05 | 0.75 | 0.72 |
| PTK.V | POET Technologies Inc | 0 | 0.3 | 0.3 |
| SQNS | Sequans Communications SA | 0.23 | 1.28 | 1.08 |
| TGAN | Transphorm Technology Inc | 0.04 | 1.66 | 1.61 |
| Low | High | |
| Unlevered beta | 0.9 | 1.1 |
| Relevered beta | 1.51 | 2.19 |
| Adjusted relevered beta | 1.34 | 1.8 |
SIMO'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 SIMO:
cost_of_equity (12.50%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.34) + 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.