SWKS WACC - Weighted Average Cost of Capital
The WACC of Skyworks Solutions Inc (SWKS) is 10.0%.
| Range | Selected | |
| Cost of equity | 8.9% - 12.1% | 10.5% |
| Tax rate | 7.7% - 8.7% | 8.2% |
| Cost of debt | 4.5% - 4.5% | 4.5% |
| WACC | 8.5% - 11.4% | 10.0% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.1 | 1.29 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.9% | 12.1% |
| Tax rate | 7.7% | 8.7% |
| Debt/Equity ratio | 0.09 | 0.09 |
| Cost of debt | 4.5% | 4.5% |
| After-tax WACC | 8.5% | 11.4% |
| Selected WACC | 10.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| SWKS | Skyworks Solutions Inc | 0.09 | 1.43 | 1.32 |
| CREE | Cree Inc | 0.09 | 1.45 | 1.34 |
| FSLR | First Solar Inc | 0.04 | 0.77 | 0.74 |
| IPHI | Inphi Corp | 0.05 | 0.93 | 0.89 |
| MCHP | Microchip Technology Inc | 0.2 | 1.97 | 1.67 |
| MXIM | Maxim Integrated Products Inc | 0.04 | 1.16 | 1.13 |
| ON | ON Semiconductor Corp | 0.19 | 1.73 | 1.47 |
| QRVO | Qorvo Inc | 0.22 | 1.75 | 1.45 |
| SPWR | SunPower Corp | 0.45 | 1.25 | 0.89 |
| XLNX | Xilinx Inc | 0.03 | 0.98 | 0.95 |
| Low | High | |
| Unlevered beta | 1.06 | 1.33 |
| Relevered beta | 1.15 | 1.43 |
| Adjusted relevered beta | 1.1 | 1.29 |
SWKS'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 SWKS:
cost_of_equity (10.50%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.1) + 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.