The WACC of Hexatronic Group AB (HTRO.ST) is 8.0%.
| Range | Selected | |
| Cost of equity | 9.10% - 12.80% | 10.95% |
| Tax rate | 23.70% - 24.20% | 23.95% |
| Cost of debt | 4.00% - 4.50% | 4.25% |
| WACC | 6.8% - 9.2% | 8.0% |
| Category | Low | High |
| Long-term bond rate | 2.5% | 3.0% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 1.29 | 1.52 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.10% | 12.80% |
| Tax rate | 23.70% | 24.20% |
| Debt/Equity ratio | 0.62 | 0.62 |
| Cost of debt | 4.00% | 4.50% |
| After-tax WACC | 6.8% | 9.2% |
| Selected WACC | 8.0% | |
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 HTRO.ST:
cost_of_equity (10.95%) = risk_free_rate (2.75%) + equity_risk_premium (5.60%) * adjusted_beta (1.29) + 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.