Zogenix WACC - Weighted Average Cost of Capital
The WACC of Zogenix Inc (ZGNX) is 6.7%.
| Range | Selected | |
| Cost of equity | 5.7% - 7.7% | 6.7% |
| Tax rate | 0.0% - 3.1% | 1.55% |
| Cost of debt | 7.0% - 7.0% | 7% |
| WACC | 5.8% - 7.6% | 6.7% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 0.59 | 0.68 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.7% | 7.7% |
| Tax rate | 0.0% | 3.1% |
| Debt/Equity ratio | 0.11 | 0.11 |
| Cost of debt | 7.0% | 7.0% |
| After-tax WACC | 5.8% | 7.6% |
| Selected WACC | 6.7% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| ZGNX | Zogenix Inc | 0.11 | 0.9 | 0.82 |
| ACRG.A.U.CN | Acreage Holdings Inc | 726.94 | 3.55 | 0 |
| AYR.A.CN | Ayr Wellness Inc | 18.05 | 2.37 | 0.12 |
| EVFM | Evofem Biosciences Inc | 41.72 | -0.08 | 0 |
| HEXO.TO | Hexo Corp | 6.59 | 2.15 | 0.28 |
| KALA | Kala Pharmaceuticals Inc | 1.02 | 1.05 | 0.52 |
| MRK | Merck & Co Inc | 0.19 | 0.4 | 0.34 |
| MRNS | Marinus Pharmaceuticals Inc | 2.4 | 3.7 | 1.09 |
| OGI.TO | OrganiGram Holdings Inc | 0.13 | 2.32 | 2.05 |
| TBPH | Theravance Biopharma Inc | 0.05 | 1.1 | 1.05 |
| Low | High | |
| Unlevered beta | 0.32 | 0.64 |
| Relevered beta | 0.39 | 0.52 |
| Adjusted relevered beta | 0.59 | 0.68 |
Zogenix'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 Zogenix:
cost_of_equity (6.70%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (0.59) + 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.