SMTC
Semtech Corp
Price:  
53.62 
USD
Volume:  
2,568,406.00
United States | Semiconductors & Semiconductor Equipment
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SMTC WACC - Weighted Average Cost of Capital

The WACC of Semtech Corp (SMTC) is 9.2%.

The Cost of Equity of Semtech Corp (SMTC) is 9.40%.
The Cost of Debt of Semtech Corp (SMTC) is 8.80%.

Range Selected
Cost of equity 7.30% - 11.50% 9.40%
Tax rate 8.80% - 11.50% 10.15%
Cost of debt 5.20% - 12.40% 8.80%
WACC 7.0% - 11.4% 9.2%
WACC

SMTC WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.74 1.18
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.30% 11.50%
Tax rate 8.80% 11.50%
Debt/Equity ratio 0.13 0.13
Cost of debt 5.20% 12.40%
After-tax WACC 7.0% 11.4%
Selected WACC 9.2%

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 (9.40%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.74) + 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.