HMM.A.TO
Hammond Manufacturing Company Ltd
Price:  
10.26 
CAD
Volume:  
3,843.00
Canada | Electrical Equipment
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HMM.A.TO WACC - Weighted Average Cost of Capital

The WACC of Hammond Manufacturing Company Ltd (HMM.A.TO) is 7.6%.

The Cost of Equity of Hammond Manufacturing Company Ltd (HMM.A.TO) is 9.65%.
The Cost of Debt of Hammond Manufacturing Company Ltd (HMM.A.TO) is 4.60%.

Range Selected
Cost of equity 7.70% - 11.60% 9.65%
Tax rate 25.00% - 25.10% 25.05%
Cost of debt 4.10% - 5.10% 4.60%
WACC 6.2% - 9.0% 7.6%
WACC

HMM.A.TO WACC calculation

Category Low High
Long-term bond rate 3.2% 3.7%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.9 1.23
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.70% 11.60%
Tax rate 25.00% 25.10%
Debt/Equity ratio 0.5 0.5
Cost of debt 4.10% 5.10%
After-tax WACC 6.2% 9.0%
Selected WACC 7.6%

HMM.A.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 HMM.A.TO:

cost_of_equity (9.65%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.9) + 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.