The WACC of Happiness and D Co Ltd (3174.T) is 5.5%.
Range | Selected | |
Cost of equity | 4.9% - 12.6% | 8.75% |
Tax rate | 15.2% - 30.7% | 22.95% |
Cost of debt | 4.0% - 7.0% | 5.5% |
WACC | 3.8% - 7.2% | 5.5% |
Category | Low | High |
Long-term bond rate | 1.4% | 1.9% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.57 | 1.43 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 4.9% | 12.6% |
Tax rate | 15.2% | 30.7% |
Debt/Equity ratio | 2.32 | 2.32 |
Cost of debt | 4.0% | 7.0% |
After-tax WACC | 3.8% | 7.2% |
Selected WACC | 5.5% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
3174.T | Happiness and D Co Ltd | 2.32 | 0.14 | 0.05 |
3058.T | Sanyodo Holdings Inc | 0.54 | 0.15 | 0.11 |
6186.T | Ichikura Co Ltd | 2.77 | 0.44 | 0.14 |
7610.T | Tay Two Co Ltd | 0.39 | 1.01 | 0.78 |
8136.T | Sanrio Co Ltd | 0.02 | 0.95 | 0.93 |
8230.T | Hasegawa Co Ltd | 0.63 | 0.06 | 0.04 |
9263.T | Visionaryholdings Co Ltd | 0.7 | 1.38 | 0.88 |
9854.T | Aigan Co Ltd | 0.97 | 0.1 | 0.06 |
9966.T | Fujikyu Corp | 0.01 | 0.97 | 0.96 |
9978.T | Bunkyodo Group Holdings Co Ltd | 1.78 | 1.08 | 0.44 |
Low | High | |
Unlevered beta | 0.12 | 0.58 |
Relevered beta | 0.36 | 1.64 |
Adjusted relevered beta | 0.57 | 1.43 |
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 3174.T:
cost_of_equity (8.75%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (0.57) + 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.