VREX WACC - Weighted Average Cost of Capital
The WACC of Varex Imaging Corp (VREX) is 7.8%.
| Range | Selected | |
| Cost of equity | 9.0% - 13.3% | 11.15% |
| Tax rate | 34.8% - 44.7% | 39.75% |
| Cost of debt | 6.1% - 12.4% | 9.25% |
| WACC | 6.1% - 9.5% | 7.8% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.11 | 1.5 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.0% | 13.3% |
| Tax rate | 34.8% | 44.7% |
| Debt/Equity ratio | 1.39 | 1.39 |
| Cost of debt | 6.1% | 12.4% |
| After-tax WACC | 6.1% | 9.5% |
| Selected WACC | 7.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| VREX | Varex Imaging Corp | 1.39 | 1.99 | 1.06 |
| ARAY | Accuray Inc | 1.03 | 2.05 | 1.25 |
| CRY | CryoLife Inc | 0.42 | 1.54 | 1.22 |
| CSII | Cardiovascular Systems Inc | 0.02 | 0.74 | 0.73 |
| CUTR | Cutera Inc | 955.87 | 0.4 | 0 |
| HSKA | Heska Corp | 0.07 | 1.57 | 1.5 |
| IVC | Invacare Corp | 354.95 | 0.24 | 0 |
| NTUS | Natus Medical Inc | 0 | 0.23 | 0.23 |
| OFIX | Orthofix Medical Inc | 0.37 | 1.05 | 0.85 |
| TCMD | Tactile Systems Technology Inc | 0.11 | 0.5 | 0.47 |
| Low | High | |
| Unlevered beta | 0.62 | 0.94 |
| Relevered beta | 1.16 | 1.75 |
| Adjusted relevered beta | 1.11 | 1.5 |
VREX'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 VREX:
cost_of_equity (11.15%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.11) + 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.