TZOO WACC - Weighted Average Cost of Capital
The WACC of Travelzoo (TZOO) is 6.6%.
| Range | Selected | |
| Cost of equity | 7.8% - 11.8% | 9.8% |
| Tax rate | 29.2% - 31.1% | 30.15% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.7% - 7.6% | 6.6% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.85 | 1.23 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.8% | 11.8% |
| Tax rate | 29.2% | 31.1% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.7% | 7.6% |
| Selected WACC | 6.6% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| TZOO | Travelzoo | 0.91 | 1.23 | 0.75 |
| AUTO | Autoweb Inc | 1.85 | 2.07 | 0.9 |
| DHX | DHI Group Inc | 0.23 | 0.83 | 0.71 |
| IZEA | IZEA Worldwide Inc | 0 | 1.28 | 1.28 |
| KRKR | 36kr Holdings Inc | 0.13 | 0.61 | 0.56 |
| MDF.TO | mdf Commerce Inc | 0.04 | 0.31 | 0.3 |
| MFON | Mobivity Holdings Corp | 0.57 | 0.1 | 0.07 |
| MVEN | Themaven Inc | 0.57 | 0.21 | 0.15 |
| PROM | Propel Media Inc | 0.3 | -1.43 | -1.18 |
| TRIP | Tripadvisor Inc | 0.38 | 1.4 | 1.11 |
| YNDX | Yandex NV | 0.28 | 1.61 | 1.35 |
| Low | High | |
| Unlevered beta | 0.56 | 0.75 |
| Relevered beta | 0.78 | 1.34 |
| Adjusted relevered beta | 0.85 | 1.23 |
TZOO'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 TZOO:
cost_of_equity (9.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.85) + 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.