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Western Alliance Bancorporation (WAL) — WACC Analysis

WACC Breakdown

Western Alliance Bancorporation (WAL) has a weighted average cost of capital (WACC) of 16.6%. The cost of equity is 10.9%, derived from a beta of 1.61 and a risk-free rate of 5.0%. The after-tax cost of debt is 25.4%. The capital structure is 60.6% equity and 39.4% debt.

Interpretation

A WACC of 16.6% indicates that the market perceives Western Alliance Bancorporation as higher-risk, requiring a greater return to compensate investors.

Investors can compare WAL's WACC of 16.6% against industry peers to gauge its relative financing costs. A beta of 1.61 reflects the stock's volatility relative to the broader market.

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VALUATION

WAL WACC: 16.63% for Western Alliance Bancorporation

Current inputs imply a 10.92% cost of equity and a 32.17% pre-tax cost of debt. Use this discount rate as a starting point for DCF validation.

[01]Current Market Data
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WACC Calculation Process
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Market Data Loaded
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Company Data Fetched
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Beta Calculated (5Y)
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Inputs Auto-Populated
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WACC Calculated
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Step 2: Enter Ticker Symbol
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Step 4: Review Auto-Populated WACC Inputs

Values are automatically populated from real data. You can adjust them manually if needed.

4.30%
1.000
4.23%
5.00%
21.00%
70.00%
Debt: 30.00%Equity: 70.00%

Please enter a valid company ticker to calculate WACC

Western Alliance Bancorporation Common Stock (WAL) WACC Results
Weighted Average Cost of Capital
16.63%
Cost of Equity
10.92%
Risk-Free Rate4.97%
Beta1.61
Market Risk Premium4.23%
Cost of Debt
25.42%
Pre-Tax Cost of Debt32.17%
Tax Rate21.00%
Tax Shield6.76%
Capital Structure
Equity: 60.63%($8638.61M)
Debt: 39.37%($5610.00M)
Equity Component
6.62%
60.63% × 10.92%
Debt Component
10.01%
39.37% × 25.42%

Western Alliance Bancorporation (WAL) WACC in context

Western Alliance Bancorporation (WAL) currently screens with an estimated WACC of 16.63%. That blends a 10.92% cost of equity, a 32.17% pre-tax cost of debt, and a 60.63% equity weight into the discount rate you would typically use in a DCF model.

screens as a relatively high discount rate, which makes valuation more sensitive to execution and capital structure risk.

What WAL WACC implies

A 16.63% discount rate screens as a relatively high discount rate, which makes valuation more sensitive to execution and capital structure risk.

How this page calculates WAL

This page combines CAPM-based cost of equity with SEC-derived debt and capital structure inputs. The current beta is 1.61 and equity accounts for 60.63% of capital.

What to do next

Validate business quality on the company page, then carry the same discount-rate assumptions into the DCF page to test fair value sensitivity.

Disclaimer: This is not financial advice. Data sourced from SEC EDGAR and Polygon.io. Past performance does not guarantee future results. Always conduct your own research before making investment decisions.