TRUP
Trupanion Inc
Price:  
44.27 
USD
Volume:  
360,833.00
United States | Insurance
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Trupanion WACC - Weighted Average Cost of Capital

The WACC of Trupanion Inc (TRUP) is 10.0%.

The Cost of Equity of Trupanion Inc (TRUP) is 9.65%.
The Cost of Debt of Trupanion Inc (TRUP) is 15.60%.

Range Selected
Cost of equity 7.90% - 11.40% 9.65%
Tax rate 0.80% - 1.00% 0.90%
Cost of debt 15.60% - 15.60% 15.60%
WACC 8.3% - 11.6% 10.0%
WACC

Trupanion WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.87 1.16
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.90% 11.40%
Tax rate 0.80% 1.00%
Debt/Equity ratio 0.07 0.07
Cost of debt 15.60% 15.60%
After-tax WACC 8.3% 11.6%
Selected WACC 10.0%

Trupanion'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 Trupanion:

cost_of_equity (9.65%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.87) + 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.