6890.T WACC - Weighted Average Cost of Capital
The WACC of Ferrotec Holdings Corp (6890.T) is 8.5%.
| Range | Selected | |
| Cost of equity | 12.1% - 16.4% | 14.25% |
| Tax rate | 20.0% - 21.8% | 20.9% |
| Cost of debt | 4.0% - 4.5% | 4.25% |
| WACC | 7.4% - 9.6% | 8.5% |
| Category | Low | High |
| Long-term bond rate | 1.4% | 1.9% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 1.75 | 1.97 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 12.1% | 16.4% |
| Tax rate | 20.0% | 21.8% |
| Debt/Equity ratio | 1.11 | 1.11 |
| Cost of debt | 4.0% | 4.5% |
| After-tax WACC | 7.4% | 9.6% |
| Selected WACC | 8.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 6890.T | Ferrotec Holdings Corp | 1.11 | 1.8 | 0.96 |
| 4369.T | Tri Chemical Laboratories Inc | 0.02 | 1.26 | 1.25 |
| 6235.T | Optorun Co Ltd | 0.07 | 1.3 | 1.23 |
| 6266.T | Tazmo Co Ltd | 0.27 | 1.67 | 1.38 |
| 6298.T | Y.A.C. Holdings Co., Ltd. | 1.07 | 1.66 | 0.9 |
| 6590.T | Shibaura Mechatronics Corp | 0.06 | 1.58 | 1.51 |
| 6677.T | SK-Electronics Co Ltd | 0.03 | 0.99 | 0.97 |
| 6855.T | Japan Electronic Materials Corp | 0.2 | 1.73 | 1.49 |
| 7729.T | Tokyo Seimitsu Co Ltd | 0.05 | 1.87 | 1.8 |
| 8155.T | Mimasu Semiconductor Industry Co Ltd | 0.01 | 0.55 | 0.55 |
| Low | High | |
| Unlevered beta | 1.13 | 1.3 |
| Relevered beta | 2.12 | 2.45 |
| Adjusted relevered beta | 1.75 | 1.97 |
6890.T's CAPM model and how its cost of Equity is calculated
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 6890.T:
cost_of_equity (14.25%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (1.75) + 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.