The WACC of Tensho Electric Industries Co Ltd (6776.T) is 7.0%.
Range | Selected | |
Cost of equity | 11.9% - 16.1% | 14% |
Tax rate | 27.6% - 30.3% | 28.95% |
Cost of debt | 4.0% - 4.5% | 4.25% |
WACC | 6.1% - 7.8% | 7.0% |
Category | Low | High |
Long-term bond rate | 1.4% | 1.9% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 1.71 | 1.93 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 11.9% | 16.1% |
Tax rate | 27.6% | 30.3% |
Debt/Equity ratio | 1.79 | 1.79 |
Cost of debt | 4.0% | 4.5% |
After-tax WACC | 6.1% | 7.8% |
Selected WACC | 7.0% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
6776.T | Tensho Electric Industries Co Ltd | 1.79 | 0.6 | 0.26 |
4022.T | Rasa Industries Ltd | 0.26 | 1.1 | 0.93 |
4107.T | Ise Chemicals Corp | 0 | 1.02 | 1.02 |
4222.T | Kodama Chemical Industry Co Ltd | 0.46 | 1.59 | 1.19 |
4251.T | Keiwa Inc | 0.16 | 1.15 | 1.03 |
4627.T | Natoco Co Ltd | 0.02 | 0.47 | 0.47 |
6619.T | W-Scope Corp | 0.62 | 1.61 | 1.11 |
7908.T | Kimoto Co Ltd | 0 | 1.08 | 1.07 |
7927.T | Muto Seiko Co | 0.57 | 0.83 | 0.59 |
8152.T | Somar Corp | 0.47 | 1.23 | 0.92 |
Low | High | |
Unlevered beta | 0.93 | 1.02 |
Relevered beta | 2.06 | 2.39 |
Adjusted relevered beta | 1.71 | 1.93 |
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 6776.T:
cost_of_equity (14.00%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (1.71) + 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.