UTSI WACC - Weighted Average Cost of Capital
The WACC of UTStarcom Holdings Corp (UTSI) is 6.0%.
| Range | Selected | |
| Cost of equity | 6.6% - 10.1% | 8.35% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.1% - 6.9% | 6.0% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.59 | 0.94 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.6% | 10.1% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.1% | 6.9% |
| Selected WACC | 6.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| UTSI | UTStarcom Holdings Corp | 1.02 | 0.95 | 0.54 |
| BDR | Blonder Tongue Laboratories Inc | 0.99 | 0.65 | 0.37 |
| LTE.V | Lite Access Technologies Inc | 0.08 | -0.1 | -0.09 |
| LTRX | Lantronix Inc | 0.2 | 0.6 | 0.52 |
| OCC | Optical Cable Corp | 0.45 | 1.2 | 0.9 |
| PCTI | PCTEL Inc | 0 | -0.35 | -0.35 |
| VCM.TO | Vecima Networks Inc | 0.28 | 0.65 | 0.54 |
| XCOMQ | Xtera Communications Inc | 745644.6 | -1.16 | 0 |
| YTY.V | Wi2wi Corp | 0.98 | 1.44 | 0.84 |
| 600487.SS | Hengtong Optic-Electric Co Ltd | 0.53 | 0.85 | 0.62 |
| Low | High | |
| Unlevered beta | 0.46 | 0.54 |
| Relevered beta | 0.39 | 0.91 |
| Adjusted relevered beta | 0.59 | 0.94 |
UTSI'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 UTSI:
cost_of_equity (8.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.59) + 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.