The WACC of DMG Mori Co Ltd (6141.T) is 7.7%.
Range | Selected | |
Cost of equity | 7.4% - 10.3% | 8.85% |
Tax rate | 31.3% - 34.7% | 33% |
Cost of debt | 4.0% - 4.6% | 4.3% |
WACC | 6.6% - 8.9% | 7.7% |
Category | Low | High |
Long-term bond rate | 1.4% | 1.9% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.99 | 1.1 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 7.4% | 10.3% |
Tax rate | 31.3% | 34.7% |
Debt/Equity ratio | 0.23 | 0.23 |
Cost of debt | 4.0% | 4.6% |
After-tax WACC | 6.6% | 8.9% |
Selected WACC | 7.7% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
6141.T | DMG Mori Co Ltd | 0.23 | 1.56 | 1.35 |
5631.T | Japan Steel Works Ltd | 0.08 | 1.5 | 1.43 |
6113.T | Amada Co Ltd | 0.04 | 1.14 | 1.11 |
6268.T | Nabtesco Corp | 0.14 | 1.12 | 1.02 |
6371.T | Tsubakimoto Chain Co | 0.14 | 0.93 | 0.85 |
6457.T | Glory Ltd | 0.4 | 0.93 | 0.74 |
6474.T | Nachi-Fujikoshi Corp | 1.18 | 0.93 | 0.52 |
6481.T | THK Co Ltd | 0.21 | 0.97 | 0.85 |
6508.T | Meidensha Corp | 0.27 | 1.17 | 0.99 |
7004.T | Hitachi Zosen Corp | 0.81 | 1 | 0.65 |
Low | High | |
Unlevered beta | 0.85 | 1 |
Relevered beta | 0.99 | 1.15 |
Adjusted relevered beta | 0.99 | 1.1 |
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 6141.T:
cost_of_equity (8.85%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (0.99) + 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.