ZBH
Zimmer Biomet Holdings Inc
Price:  
92.29 
USD
Volume:  
1,474,322.00
United States | Health Care Equipment & Supplies
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ZBH WACC - Weighted Average Cost of Capital

The WACC of Zimmer Biomet Holdings Inc (ZBH) is 7.0%.

The Cost of Equity of Zimmer Biomet Holdings Inc (ZBH) is 8.10%.
The Cost of Debt of Zimmer Biomet Holdings Inc (ZBH) is 4.45%.

Range Selected
Cost of equity 6.50% - 9.70% 8.10%
Tax rate 11.90% - 18.70% 15.30%
Cost of debt 4.00% - 4.90% 4.45%
WACC 5.7% - 8.3% 7.0%
WACC

ZBH WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.56 0.86
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.50% 9.70%
Tax rate 11.90% 18.70%
Debt/Equity ratio 0.34 0.34
Cost of debt 4.00% 4.90%
After-tax WACC 5.7% 8.3%
Selected WACC 7.0%

ZBH'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 ZBH:

cost_of_equity (8.10%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.56) + 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.