WOW WACC - Weighted Average Cost of Capital
The WACC of WideOpenWest Inc (WOW) is 10.0%.
| Range | Selected | |
| Cost of equity | 5.6% - 7.2% | 6.4% |
| Tax rate | 23.8% - 26.4% | 25.1% |
| Cost of debt | 6.4% - 23.9% | 15.15% |
| WACC | 5.1% - 14.9% | 10.0% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.38 | 0.41 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.6% | 7.2% |
| Tax rate | 23.8% | 26.4% |
| Debt/Equity ratio | 2.85 | 2.85 |
| Cost of debt | 6.4% | 23.9% |
| After-tax WACC | 5.1% | 14.9% |
| Selected WACC | 10.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| WOW | WideOpenWest Inc | 2.85 | 0.61 | 0.19 |
| ATUS | Altice USA Inc | 24.13 | 0.57 | 0.03 |
| CABO | Cable One Inc | 4.67 | 0.15 | 0.03 |
| CCA.TO | Cogeco Communications Inc | 1.57 | 0.3 | 0.14 |
| CGO.TO | Cogeco Inc | 8.96 | 0.39 | 0.05 |
| CJR.B.TO | Corus Entertainment Inc | 59.66 | 0.86 | 0.02 |
| MSGN | MSG Networks Inc | 1.34 | 1.15 | 0.57 |
| QBR.B.TO | Quebecor Inc | 0.84 | -0.25 | -0.15 |
| SSP | E. W. Scripps Co | 8.95 | 0.06 | 0.01 |
| TVTV | Wherevertv Broadcasting Corp | 0.77 | -0.58 | -0.37 |
| Low | High | |
| Unlevered beta | 0.03 | 0.04 |
| Relevered beta | 0.07 | 0.12 |
| Adjusted relevered beta | 0.38 | 0.41 |
WOW'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 WOW:
cost_of_equity (6.40%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.38) + 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.