SPT
Sprout Social Inc
Price:  
20.91 
USD
Volume:  
677,666.00
United States | Software
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SPT WACC - Weighted Average Cost of Capital

The WACC of Sprout Social Inc (SPT) is 8.4%.

The Cost of Equity of Sprout Social Inc (SPT) is 8.45%.
The Cost of Debt of Sprout Social Inc (SPT) is 7.00%.

Range Selected
Cost of equity 6.90% - 10.00% 8.45%
Tax rate 0.80% - 0.90% 0.85%
Cost of debt 7.00% - 7.00% 7.00%
WACC 6.9% - 9.9% 8.4%
WACC

SPT WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.65 0.91
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.90% 10.00%
Tax rate 0.80% 0.90%
Debt/Equity ratio 0.02 0.02
Cost of debt 7.00% 7.00%
After-tax WACC 6.9% 9.9%
Selected WACC 8.4%

SPT'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 SPT:

cost_of_equity (8.45%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.65) + 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.