HRX.TO
Heroux Devtek Inc
Price:  
32.48 
CAD
Volume:  
21,599.00
Canada | Aerospace & Defense
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HRX.TO WACC - Weighted Average Cost of Capital

The WACC of Heroux Devtek Inc (HRX.TO) is 6.9%.

The Cost of Equity of Heroux Devtek Inc (HRX.TO) is 7.60%.
The Cost of Debt of Heroux Devtek Inc (HRX.TO) is 4.25%.

Range Selected
Cost of equity 6.50% - 8.70% 7.60%
Tax rate 22.30% - 23.90% 23.10%
Cost of debt 4.00% - 4.50% 4.25%
WACC 5.9% - 7.9% 6.9%
WACC

HRX.TO WACC calculation

Category Low High
Long-term bond rate 3.2% 3.7%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.65 0.75
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.50% 8.70%
Tax rate 22.30% 23.90%
Debt/Equity ratio 0.2 0.2
Cost of debt 4.00% 4.50%
After-tax WACC 5.9% 7.9%
Selected WACC 6.9%

HRX.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 HRX.TO:

cost_of_equity (7.60%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.65) + 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.