SMTC
Semtech Corp
Price:  
44.84 
USD
Volume:  
919,331
United States | Semiconductors & Semiconductor Equipment

SMTC WACC - Weighted Average Cost of Capital

The WACC of Semtech Corp (SMTC) is 8.9%.

The Cost of Equity of Semtech Corp (SMTC) is 9%.
The Cost of Debt of Semtech Corp (SMTC) is 8.8%.

RangeSelected
Cost of equity6.5% - 11.5%9%
Tax rate8.8% - 11.5%10.15%
Cost of debt5.2% - 12.4%8.8%
WACC6.3% - 11.4%8.9%
WACC

SMTC WACC calculation

CategoryLowHigh
Long-term bond rate3.9%4.4%
Equity market risk premium4.6%5.6%
Adjusted beta0.581.18
Additional risk adjustments0.0%0.5%
Cost of equity6.5%11.5%
Tax rate8.8%11.5%
Debt/Equity ratio
0.140.14
Cost of debt5.2%12.4%
After-tax WACC6.3%11.4%
Selected WACC8.9%

SMTC'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 SMTC:

cost_of_equity (9.00%) = 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.