HREN.SW
Romande Energie Holding SA
Price:  
53 
CHF
Volume:  
343
Switzerland | Electric Utilities

HREN.SW WACC - Weighted Average Cost of Capital

The WACC of Romande Energie Holding SA (HREN.SW) is 5.9%.

The Cost of Equity of Romande Energie Holding SA (HREN.SW) is 6.05%.
The Cost of Debt of Romande Energie Holding SA (HREN.SW) is 4.25%.

RangeSelected
Cost of equity5.1% - 7.0%6.05%
Tax rate11.5% - 13.6%12.55%
Cost of debt4.0% - 4.5%4.25%
WACC5.0% - 6.8%5.9%
WACC

HREN.SW WACC calculation

CategoryLowHigh
Long-term bond rate1.4%1.9%
Equity market risk premium5.5%6.5%
Adjusted beta0.40.48
Additional risk adjustments1.5%2.0%
Cost of equity5.1%7.0%
Tax rate11.5%13.6%
Debt/Equity ratio
0.090.09
Cost of debt4.0%4.5%
After-tax WACC5.0%6.8%
Selected WACC5.9%

HREN.SW'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 HREN.SW:

cost_of_equity (6.05%) = risk_free_rate (1.65%) + equity_risk_premium (6.00%) * adjusted_beta (0.4) + risk_adjustments (1.75%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.