ZBH
Zimmer Biomet Holdings Inc
Price:  
94.13 
USD
Volume:  
2,662,430.00
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 7.95%.
The Cost of Debt of Zimmer Biomet Holdings Inc (ZBH) is 4.40%.

Range Selected
Cost of equity 6.30% - 9.60% 7.95%
Tax rate 11.90% - 18.70% 15.30%
Cost of debt 4.00% - 4.80% 4.40%
WACC 5.7% - 8.2% 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 0.54 0.84
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.30% 9.60%
Tax rate 11.90% 18.70%
Debt/Equity ratio 0.31 0.31
Cost of debt 4.00% 4.80%
After-tax WACC 5.7% 8.2%
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 (7.95%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.54) + 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.