UTI WACC - Weighted Average Cost of Capital
The WACC of Universal Technical Institute Inc (UTI) is 8.6%.
| Range | Selected | |
| Cost of equity | 6.7% - 9.6% | 8.15% |
| Tax rate | 26.0% - 28.6% | 27.3% |
| Cost of debt | 4.8% - 35.7% | 20.25% |
| WACC | 6.5% - 10.7% | 8.6% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.61 | 0.85 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.7% | 9.6% |
| Tax rate | 26.0% | 28.6% |
| Debt/Equity ratio | 0.07 | 0.07 |
| Cost of debt | 4.8% | 35.7% |
| After-tax WACC | 6.5% | 10.7% |
| Selected WACC | 8.6% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| UTI | Universal Technical Institute Inc | 0.07 | 0.96 | 0.91 |
| AFYA | Afya Ltd | 0.36 | 0.45 | 0.36 |
| AMBO | Ambow Education Holding Ltd | 0.05 | 0.87 | 0.83 |
| APEI | American Public Education Inc | 0.17 | 0.77 | 0.68 |
| FEDU | Four Seasons Education (Cayman) Inc | 0.26 | 0.52 | 0.43 |
| LINC | Lincoln Educational Services Corp | 0.04 | 1.13 | 1.1 |
| ONE | OneSmart International Education Group Ltd | 34.06 | 0.09 | 0 |
| TIGE | Tigrent Inc | 619.02 | -0.03 | 0 |
| VTRU | Vitru Ltd | 1.52 | 0.74 | 0.35 |
| ZVO | Zovio Inc | 0.45 | 1.27 | 0.95 |
| Low | High | |
| Unlevered beta | 0.4 | 0.74 |
| Relevered beta | 0.42 | 0.78 |
| Adjusted relevered beta | 0.61 | 0.85 |
UTI'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 UTI:
cost_of_equity (8.15%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.61) + 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.