TREE
LendingTree Inc
Price:  
43.22 
USD
Volume:  
3,259,799.00
United States | Consumer Finance
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LendingTree WACC - Weighted Average Cost of Capital

The WACC of LendingTree Inc (TREE) is 6.9%.

The Cost of Equity of LendingTree Inc (TREE) is 7.15%.
The Cost of Debt of LendingTree Inc (TREE) is 8.20%.

Range Selected
Cost of equity 6.20% - 8.10% 7.15%
Tax rate 12.70% - 21.10% 16.90%
Cost of debt 4.00% - 12.40% 8.20%
WACC 5.0% - 8.8% 6.9%
WACC

LendingTree WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.51 0.57
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.20% 8.10%
Tax rate 12.70% 21.10%
Debt/Equity ratio 0.8 0.8
Cost of debt 4.00% 12.40%
After-tax WACC 5.0% 8.8%
Selected WACC 6.9%

LendingTree'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 LendingTree:

cost_of_equity (7.15%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.51) + 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.