The WACC of Tetra Tech Inc (TTEK) is 8.4%.
Range | Selected | |
Cost of equity | 7.6% - 9.9% | 8.75% |
Tax rate | 24.2% - 25.9% | 25.05% |
Cost of debt | 4.5% - 8.1% | 6.3% |
WACC | 7.3% - 9.6% | 8.4% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 0.81 | 0.9 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 7.6% | 9.9% |
Tax rate | 24.2% | 25.9% |
Debt/Equity ratio | 0.08 | 0.08 |
Cost of debt | 4.5% | 8.1% |
After-tax WACC | 7.3% | 9.6% |
Selected WACC | 8.4% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
TTEK | Tetra Tech Inc | 0.08 | 0.18 | 0.17 |
AXU.TO | Alexco Resource Corp | 0.05 | 1.53 | 1.47 |
BHTG | BioHiTech Global Inc | 1.59 | 1.13 | 0.51 |
CLH | Clean Harbors Inc | 0.24 | 0.93 | 0.79 |
CVA | Covanta Holding Corp | 0.95 | 1.38 | 0.8 |
ETK.H.V | Envirotek Remediation Inc | 0.22 | 1.09 | 0.93 |
HSC | Harsco Corp | 1.86 | 1.71 | 0.71 |
MATW | Matthews International Corp | 0.99 | 1.07 | 0.61 |
MEG | Montrose Environmental Group Inc | 0.3 | 1.08 | 0.88 |
SRCL | Stericycle Inc | 0.23 | 0.3 | 0.26 |
Low | High | |
Unlevered beta | 0.67 | 0.8 |
Relevered beta | 0.72 | 0.85 |
Adjusted relevered beta | 0.81 | 0.9 |
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 TTEK:
cost_of_equity (8.75%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.81) + 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.