The WACC of Sankyo Co Ltd (6417.T) is 7.5%.
Range | Selected | |
Cost of equity | 9.6% - 13.3% | 11.45% |
Tax rate | 26.8% - 28.0% | 27.4% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 6.6% - 8.4% | 7.5% |
Category | Low | High |
Long-term bond rate | 1.4% | 1.9% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 1.34 | 1.53 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 9.6% | 13.3% |
Tax rate | 26.8% | 28.0% |
Debt/Equity ratio | 1 | 1 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 6.6% | 8.4% |
Selected WACC | 7.5% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
6417.T | Sankyo Co Ltd | 0.8 | 0.73 | 0.46 |
002292.SZ | Alpha Group | 0.06 | 1.75 | 1.69 |
002489.SZ | Yotrio Group Co Ltd | 0.26 | 1.22 | 1.03 |
002678.SZ | Guangzhou Pearl River Piano Group Co Ltd | 0.04 | 1.4 | 1.36 |
2767.T | Fields Corp | 0.11 | 1.25 | 1.16 |
6419.T | Mars Group Holdings Corp | 0.01 | 0.56 | 0.56 |
7816.T | Snow Peak Inc | 0.3 | 1.11 | 0.91 |
7906.T | Yonex Co Ltd | 0.05 | 0.84 | 0.81 |
7952.T | Kawai Musical Instruments Manufacturing Co Ltd | 0.37 | 0.87 | 0.69 |
7990.T | Globeride Inc | 0.57 | 0.66 | 0.46 |
8022.T | Mizuno Corp | 0.06 | 1.09 | 1.05 |
Low | High | |
Unlevered beta | 0.81 | 1.03 |
Relevered beta | 1.51 | 1.79 |
Adjusted relevered beta | 1.34 | 1.53 |
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 6417.T:
cost_of_equity (11.45%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (1.34) + 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.