HREN.SW WACC - Weighted Average Cost of Capital
The WACC of Romande Energie Holding SA (HREN.SW) is 5.9%.
| Range | Selected | |
| Cost of equity | 5.1% - 7.0% | 6.05% |
| Tax rate | 11.5% - 13.6% | 12.55% |
| Cost of debt | 4.0% - 4.5% | 4.25% |
| WACC | 5.0% - 6.8% | 5.9% |
| Category | Low | High |
| Long-term bond rate | 1.4% | 1.9% |
| Equity market risk premium | 5.5% | 6.5% |
| Adjusted beta | 0.4 | 0.48 |
| Additional risk adjustments | 1.5% | 2.0% |
| Cost of equity | 5.1% | 7.0% |
| Tax rate | 11.5% | 13.6% |
| Debt/Equity ratio | 0.09 | 0.09 |
| Cost of debt | 4.0% | 4.5% |
| After-tax WACC | 5.0% | 6.8% |
| Selected WACC | 5.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| HREN.SW | Romande Energie Holding SA | 0.09 | 0.16 | 0.15 |
| ELEC.PA | Electricite de Strasbourg SA | 0.02 | 0.04 | 0.04 |
| FAST.AS | Fastned BV | 0.62 | 0.68 | 0.44 |
| FKRFT.OL | Fjordkraft Holding ASA | 0.23 | 0.31 | 0.25 |
| IRL.WA | Inter RAO Lietuva AB | 0.01 | 0 | 0 |
| JEL.L | Jersey Electricity PLC | 0.24 | 0.36 | 0.3 |
| LGD1L.VS | Litgrid AB | 0.08 | 0.36 | 0.33 |
| ODAS.IS | ODAS Elektrik Uretim Sanayi Ticaret AS | 1.06 | 1.56 | 0.81 |
| OPG.L | OPG Power Ventures PLC | 1.07 | -0.66 | -0.34 |
| ZEP.WA | Zespol Elektrowni Patnow Adamow Konin SA | 0.03 | 0.72 | 0.7 |
| Low | High | |
| Unlevered beta | 0.21 | 0.31 |
| Relevered beta | 0.1 | 0.22 |
| Adjusted relevered beta | 0.4 | 0.48 |
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.