HMM.A.TO
Hammond Manufacturing Company Ltd
Price:  
9.99 
CAD
Volume:  
25,864.00
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 8.1%.

The Cost of Equity of Hammond Manufacturing Company Ltd (HMM.A.TO) is 10.35%.
The Cost of Debt of Hammond Manufacturing Company Ltd (HMM.A.TO) is 4.60%.

Range Selected
Cost of equity 8.70% - 12.00% 10.35%
Tax rate 25.00% - 25.10% 25.05%
Cost of debt 4.10% - 5.10% 4.60%
WACC 6.9% - 9.3% 8.1%
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 1.09 1.28
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.70% 12.00%
Tax rate 25.00% 25.10%
Debt/Equity ratio 0.48 0.48
Cost of debt 4.10% 5.10%
After-tax WACC 6.9% 9.3%
Selected WACC 8.1%

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 (10.35%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.09) + 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.