The WACC of Halo Food Co Ltd (HLF.AX) is 5.8%.
| Range | Selected | |
| Cost of equity | 12.10% - 17.20% | 14.65% |
| Tax rate | 2.40% - 3.50% | 2.95% |
| Cost of debt | 5.10% - 5.10% | 5.10% |
| WACC | 5.6% - 6.0% | 5.8% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 1.59 | 1.99 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 12.10% | 17.20% |
| Tax rate | 2.40% | 3.50% |
| Debt/Equity ratio | 10.07 | 10.07 |
| Cost of debt | 5.10% | 5.10% |
| After-tax WACC | 5.6% | 6.0% |
| Selected WACC | 5.8% | |
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 HLF.AX:
cost_of_equity (14.65%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (1.59) + 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.