The WACC of TSS Inc (TSSI) is 8.0%.
Range | Selected | |
Cost of equity | 7.1% - 8.9% | 8% |
Tax rate | 25.4% - 41.0% | 33.2% |
Cost of debt | 6.1% - 6.1% | 6.1% |
WACC | 7.1% - 8.9% | 8.0% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 0.71 | 0.73 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 7.1% | 8.9% |
Tax rate | 25.4% | 41.0% |
Debt/Equity ratio | 0.01 | 0.01 |
Cost of debt | 6.1% | 6.1% |
After-tax WACC | 7.1% | 8.9% |
Selected WACC | 8.0% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
TSSI | TSS Inc | 0.01 | 4.71 | 4.67 |
AXR | AMREP Corp | 0 | 0.65 | 0.65 |
BHTG | BioHiTech Global Inc | 1.59 | 1.13 | 0.57 |
MATW | Matthews International Corp | 1 | 1.06 | 0.66 |
NMSCA | Nutrition Management Services Co | 1.64 | -1.5 | -0.74 |
SFRX | Seafarer Exploration Corp | 0.09 | 0.59 | 0.56 |
UPI.V | Universal PropTech Inc | 0.21 | 0.69 | 0.61 |
VSEC | VSE Corp | 0.16 | 1.29 | 1.18 |
WHLM | Wilhelmina International Inc | 0.01 | -0.2 | -0.2 |
NOVI.AS | Novisource NV | 0.04 | 0.57 | 0.55 |
SUL.WA | Summa Linguae Technologies SA | 0.08 | 0.29 | 0.28 |
Low | High | |
Unlevered beta | 0.56 | 0.61 |
Relevered beta | 0.57 | 0.6 |
Adjusted relevered beta | 0.71 | 0.73 |
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 TSSI:
cost_of_equity (8.00%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.71) + 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.