ZS
Zscaler Inc
Price:  
230.47 
USD
Volume:  
1,747,194.00
United States | Software
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Zscaler WACC - Weighted Average Cost of Capital

The WACC of Zscaler Inc (ZS) is 8.3%.

The Cost of Equity of Zscaler Inc (ZS) is 8.40%.
The Cost of Debt of Zscaler Inc (ZS) is 5.50%.

Range Selected
Cost of equity 6.10% - 10.70% 8.40%
Tax rate 2.00% - 5.60% 3.80%
Cost of debt 4.00% - 7.00% 5.50%
WACC 6.1% - 10.6% 8.3%
WACC

Zscaler WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.5 1.04
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.10% 10.70%
Tax rate 2.00% 5.60%
Debt/Equity ratio 0.03 0.03
Cost of debt 4.00% 7.00%
After-tax WACC 6.1% 10.6%
Selected WACC 8.3%

Zscaler'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 Zscaler:

cost_of_equity (8.40%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.5) + 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.