The WACC of Sakai Ovex Co Ltd (3408.T) is 4.8%.
| Range | Selected | |
| Cost of equity | 3.70% - 6.10% | 4.90% |
| Tax rate | 29.20% - 30.00% | 29.60% |
| Cost of debt | 4.00% - 4.50% | 4.25% |
| WACC | 3.7% - 6.0% | 4.8% |
| Category | Low | High |
| Long-term bond rate | 0.8% | 1.2% |
| Equity market risk premium | 5.4% | 6.4% |
| Adjusted beta | 0.55 | 0.68 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 3.70% | 6.10% |
| Tax rate | 29.20% | 30.00% |
| Debt/Equity ratio | 0.05 | 0.05 |
| Cost of debt | 4.00% | 4.50% |
| After-tax WACC | 3.7% | 6.0% |
| Selected WACC | 4.8% | |
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 3408.T:
cost_of_equity (4.90%) = risk_free_rate (1.00%) + equity_risk_premium (5.90%) * adjusted_beta (0.55) + 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.