GIL.TO WACC - Weighted Average Cost of Capital

The WACC of Gildan Activewear Inc (GIL.TO) is 7.8%.

The Cost of Equity of Gildan Activewear Inc (GIL.TO) is 8.55%.

The Cost of Debt of Gildan Activewear Inc (GIL.TO) is 4.60%.

	Range	Selected
Cost of equity	7.10% - 10.00%	8.55%
Tax rate	3.70% - 4.80%	4.25%
Cost of debt	4.20% - 5.00%	4.60%
WACC	6.5% - 9.1%	7.8%

WACC

GIL.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.77	0.96

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.10%	10.00%

Tax rate	3.70%	4.80%
Debt/Equity ratio	0.22	0.22
Cost of debt	4.20%	5.00%

After-tax WACC	6.5%	9.1%


Selected WACC	7.8%

GIL.TO'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 GIL.TO:

cost_of_equity (8.55%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.77) + 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.