CSIQ WACC - Weighted Average Cost of Capital
The WACC of Canadian Solar Inc (CSIQ) is 6.6%.
| Range | Selected | |
| Cost of equity | 16.9% - 30.1% | 23.5% |
| Tax rate | 17.9% - 20.3% | 19.1% |
| Cost of debt | 4.0% - 7.0% | 5.5% |
| WACC | 4.9% - 8.4% | 6.6% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 2.83 | 4.5 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 16.9% | 30.1% |
| Tax rate | 17.9% | 20.3% |
| Debt/Equity ratio | 7.65 | 7.65 |
| Cost of debt | 4.0% | 7.0% |
| After-tax WACC | 4.9% | 8.4% |
| Selected WACC | 6.6% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| CSIQ | Canadian Solar Inc | 7.65 | 1.64 | 0.23 |
| DIOD | Diodes Inc | 0.02 | 1.84 | 1.81 |
| DSPG | Dsp Group Inc | 0 | 0.9 | 0.9 |
| FSLR | First Solar Inc | 0.04 | 0.89 | 0.87 |
| IPHI | Inphi Corp | 0.05 | 0.93 | 0.89 |
| JKS | JinkoSolar Holding Co Ltd | 7.22 | 0.81 | 0.12 |
| MAXN | Maxeon Solar Technologies Ltd | 5.3 | 0.7 | 0.13 |
| NPTN | NeoPhotonics Corp | 0.05 | 0.75 | 0.72 |
| SPWR | SunPower Corp | 1.09 | 0.18 | 0.1 |
| SYNA | Synaptics Inc | 0.39 | 2.04 | 1.56 |
| Low | High | |
| Unlevered beta | 0.52 | 0.88 |
| Relevered beta | 3.73 | 6.22 |
| Adjusted relevered beta | 2.83 | 4.5 |
CSIQ'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 CSIQ:
cost_of_equity (23.50%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (2.83) + 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.