9001.T WACC - Weighted Average Cost of Capital
The WACC of Tobu Railway Co Ltd (9001.T) is 4.0%.
| Range | Selected | |
| Cost of equity | 4.7% - 6.6% | 5.65% |
| Tax rate | 30.7% - 33.4% | 32.05% |
| Cost of debt | 4.0% - 4.5% | 4.25% |
| WACC | 3.6% - 4.5% | 4.0% |
| Category | Low | High |
| Long-term bond rate | 1.4% | 1.9% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.55 | 0.59 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 4.7% | 6.6% |
| Tax rate | 30.7% | 33.4% |
| Debt/Equity ratio | 1.43 | 1.43 |
| Cost of debt | 4.0% | 4.5% |
| After-tax WACC | 3.6% | 4.5% |
| Selected WACC | 4.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 9001.T | Tobu Railway Co Ltd | 1.48 | 0.44 | 0.22 |
| 9003.T | Sotetsu Holdings Inc | 2.02 | 0.33 | 0.14 |
| 9006.T | Keikyu Corp | 1.17 | 0.29 | 0.16 |
| 9007.T | Odakyu Electric Railway Co Ltd | 1.08 | 0.45 | 0.26 |
| 9009.T | Keisei Electric Railway Co Ltd | 0.38 | 0.77 | 0.61 |
| 9024.T | Seibu Holdings Inc | 0.86 | 0.26 | 0.16 |
| 9031.T | Nishi-Nippon Railroad Co Ltd | 2.14 | 0.53 | 0.22 |
| 9042.T | Hankyu Hanshin Holdings Inc | 1.16 | 0.31 | 0.18 |
| 9048.T | Nagoya Railroad Co Ltd | 1.58 | 0.34 | 0.16 |
| 9142.T | Kyushu Railway Co | 0.7 | 0.16 | 0.11 |
| Low | High | |
| Unlevered beta | 0.16 | 0.19 |
| Relevered beta | 0.33 | 0.39 |
| Adjusted relevered beta | 0.55 | 0.59 |
9001.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 9001.T:
cost_of_equity (5.65%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (0.55) + 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.