STEP
StepStone Group Inc
Price:  
57.85 
USD
Volume:  
789,466.00
United States | Capital Markets
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STEP WACC - Weighted Average Cost of Capital

The WACC of StepStone Group Inc (STEP) is 9.5%.

The Cost of Equity of StepStone Group Inc (STEP) is 9.60%.
The Cost of Debt of StepStone Group Inc (STEP) is 7.00%.

Range Selected
Cost of equity 8.20% - 11.00% 9.60%
Tax rate 8.30% - 11.10% 9.70%
Cost of debt 7.00% - 7.00% 7.00%
WACC 8.2% - 10.9% 9.5%
WACC

STEP WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.94 1.1
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.20% 11.00%
Tax rate 8.30% 11.10%
Debt/Equity ratio 0.02 0.02
Cost of debt 7.00% 7.00%
After-tax WACC 8.2% 10.9%
Selected WACC 9.5%

STEP'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 STEP:

cost_of_equity (9.60%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.94) + 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.