The WACC of Shift Inc (3697.T) is 6.8%.
Range | Selected | |
Cost of equity | 5.6% - 8.2% | 6.9% |
Tax rate | 34.3% - 36.8% | 35.55% |
Cost of debt | 4.0% - 4.5% | 4.25% |
WACC | 5.5% - 8.1% | 6.8% |
Category | Low | High |
Long-term bond rate | 1.4% | 1.9% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.69 | 0.82 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 5.6% | 8.2% |
Tax rate | 34.3% | 36.8% |
Debt/Equity ratio | 0.02 | 0.02 |
Cost of debt | 4.0% | 4.5% |
After-tax WACC | 5.5% | 8.1% |
Selected WACC | 6.8% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
3697.T | Shift Inc | 0.02 | 1.29 | 1.28 |
3762.T | Techmatrix Corp | 0.06 | 0.74 | 0.71 |
3844.T | Comture Corp | 0 | 1.05 | 1.05 |
4053.T | Sun* Inc | 0.07 | 0.46 | 0.44 |
4348.T | Infocom Corp | 0 | -0.21 | -0.21 |
4427.T | EduLab Inc | 0.18 | 0.65 | 0.58 |
4722.T | Future Corp | 0.08 | 0.47 | 0.44 |
4819.T | Digital Garage Inc | 0.3 | 0.85 | 0.72 |
6947.T | Zuken Inc | 0.97 | 0.75 | 0.46 |
9759.T | NSD Co Ltd | 0.01 | 0.43 | 0.43 |
Low | High | |
Unlevered beta | 0.45 | 0.63 |
Relevered beta | 0.54 | 0.73 |
Adjusted relevered beta | 0.69 | 0.82 |
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 3697.T:
cost_of_equity (6.90%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (0.69) + 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.