The WACC of Guardian Capital Group Ltd (GCG.TO) is 7.7%.
Range | Selected | |
Cost of equity | 6.7% - 9.3% | 8% |
Tax rate | 13.7% - 14.5% | 14.1% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 6.5% - 8.8% | 7.7% |
Category | Low | High |
Long-term bond rate | 2.4% | 2.9% |
Equity market risk premium | 4.7% | 5.7% |
Adjusted beta | 0.91 | 1.03 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.7% | 9.3% |
Tax rate | 13.7% | 14.5% |
Debt/Equity ratio | 0.11 | 0.11 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 6.5% | 8.8% |
Selected WACC | 7.7% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
GCG.TO | Guardian Capital Group Ltd | 0.11 | 1.1 | 1.01 |
AGF.B.TO | AGF Management Ltd | 0.13 | 1.39 | 1.24 |
BCSF | Bain Capital Specialty Finance Inc | 1.42 | 0.56 | 0.25 |
CGBD | TCG BDC Inc | 0.96 | 0.57 | 0.31 |
CVG.TO | Clairvest Group Inc | 0 | 0.28 | 0.28 |
NEWT | Newtek Business Services Corp | 6.15 | 1.3 | 0.21 |
PZN | Pzena Investment Management Inc | 0 | 1.3 | 1.3 |
SLRC | SLR Investment Corp | 1.2 | 0.54 | 0.27 |
TCPC | BlackRock TCP Capital Corp | 1.83 | 0.64 | 0.25 |
WETF | Wisdom Tree Investments Inc | 0.42 | 1.44 | 1.06 |
Low | High | |
Unlevered beta | 0.27 | 0.59 |
Relevered beta | 0.87 | 1.04 |
Adjusted relevered beta | 0.91 | 1.03 |
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 GCG.TO:
cost_of_equity (8.00%) = risk_free_rate (2.65%) + equity_risk_premium (5.20%) * adjusted_beta (0.91) + 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.