The WACC of World Wrestling Entertainment Inc (WWE) is 6.6%.
Range | Selected | |
Cost of equity | 5.5% - 8.0% | 6.75% |
Tax rate | 21.1% - 22.9% | 22% |
Cost of debt | 4.0% - 4.6% | 4.3% |
WACC | 5.4% - 7.8% | 6.6% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 0.36 | 0.56 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 5.5% | 8.0% |
Tax rate | 21.1% | 22.9% |
Debt/Equity ratio | 0.05 | 0.05 |
Cost of debt | 4.0% | 4.6% |
After-tax WACC | 5.4% | 7.8% |
Selected WACC | 6.6% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
WWE | World Wrestling Entertainment Inc | 0.05 | 0.61 | 0.58 |
AMC | AMC Entertainment Holdings Inc | 2.7 | 0.57 | 0.19 |
CGX.TO | Cineplex Inc | 2.57 | 1.41 | 0.47 |
CNK | Cinemark Holdings Inc | 0.71 | 0.53 | 0.35 |
CSSE | Chicken Soup for The Soul Entertainment Inc | 1011.49 | 2.08 | 0 |
GAIA | Gaia Inc | 0.06 | 1.26 | 1.2 |
IMAX | Imax Corp | 0.17 | 0.27 | 0.24 |
IQ | iQIYI Inc | 1.08 | 1.09 | 0.59 |
MCS | Marcus Corp | 0.31 | 0.63 | 0.51 |
TME | Tencent Music Entertainment Group | 0.03 | 0.65 | 0.64 |
Low | High | |
Unlevered beta | 0.42 | 0.54 |
Relevered beta | 0.04 | 0.34 |
Adjusted relevered beta | 0.36 | 0.56 |
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 WWE:
cost_of_equity (6.75%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.36) + 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.