The WACC of Tomoe Engineering Co Ltd (6309.T) is 4.8%.
Range | Selected | |
Cost of equity | 5.6% - 7.8% | 6.7% |
Tax rate | 30.7% - 31.7% | 31.2% |
Cost of debt | 4.0% - 4.5% | 4.25% |
WACC | 4.2% - 5.4% | 4.8% |
Category | Low | High |
Long-term bond rate | 1.4% | 1.9% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.69 | 0.76 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 5.6% | 7.8% |
Tax rate | 30.7% | 31.7% |
Debt/Equity ratio | 1 | 1 |
Cost of debt | 4.0% | 4.5% |
After-tax WACC | 4.2% | 5.4% |
Selected WACC | 4.8% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
6309.T | Tomoe Engineering Co Ltd | 0.88 | 0.94 | 0.59 |
3024.T | Create Corp | 0.27 | 0.46 | 0.39 |
7417.T | Nanyo Corp | 0.1 | 0.64 | 0.6 |
7446.T | Tohoku Chemical Co Ltd | 0.2 | 0.32 | 0.28 |
7500.T | Nishikawa Keisoku Co Ltd | 0 | 0.05 | 0.05 |
7531.T | Seiwa Chuo Holdings Corp | 0.05 | 0.13 | 0.12 |
7619.T | Tanaka Co Ltd | 0.66 | 0.71 | 0.49 |
7624.T | Naito & Co Ltd | 0.01 | 0.37 | 0.37 |
8046.T | Marufuji Sheet Piling Co Ltd | 0.04 | 0.35 | 0.34 |
8835.T | Taiheiyo Kouhatsu Inc | 3.26 | 0.38 | 0.12 |
9967.T | Sakai Trading Co Ltd | 0.47 | 0.78 | 0.59 |
Low | High | |
Unlevered beta | 0.34 | 0.39 |
Relevered beta | 0.54 | 0.64 |
Adjusted relevered beta | 0.69 | 0.76 |
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 6309.T:
cost_of_equity (6.70%) = 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.