HEO.TO WACC - Weighted Average Cost of Capital
The WACC of H2O Innovation Inc (HEO.TO) is 8.3%.
| Range | Selected | |
| Cost of equity | 6.8% - 9.8% | 8.3% |
| Tax rate | 25.9% - 26.5% | 26.2% |
| Cost of debt | 7.3% - 14.9% | 11.1% |
| WACC | 6.6% - 10.0% | 8.3% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.71 | 0.92 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.8% | 9.8% |
| Tax rate | 25.9% | 26.5% |
| Debt/Equity ratio | 0.18 | 0.18 |
| Cost of debt | 7.3% | 14.9% |
| After-tax WACC | 6.6% | 10.0% |
| Selected WACC | 8.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| HEO.TO | H2O Innovation Inc | 0.18 | 0.2 | 0.18 |
| ATA.TO | ATS Automation Tooling Systems Inc | 0.27 | 1.53 | 1.28 |
| ENW.V | Enwave Corp | 0.04 | 0.16 | 0.15 |
| FHYD.V | First Hydrogen Corp | 0.06 | 0.86 | 0.82 |
| REKO.V | Reko International Group Inc | 0.54 | -0.23 | -0.17 |
| SIS.TO | Savaria Corp | 0.21 | 0.89 | 0.77 |
| VLN.TO | Velan Inc | 0.16 | 1.39 | 1.24 |
| XBC.TO | Xebec Adsorption Inc | 1.12 | 1.05 | 0.58 |
| Low | High | |
| Unlevered beta | 0.5 | 0.78 |
| Relevered beta | 0.57 | 0.88 |
| Adjusted relevered beta | 0.71 | 0.92 |
HEO.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 HEO.TO:
cost_of_equity (8.30%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.71) + 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.