The WACC of Ituran Location and Control Ltd (ITRN) is 9.7%.
Range | Selected | |
Cost of equity | 8.4% - 11.0% | 9.7% |
Tax rate | 22.7% - 24.1% | 23.4% |
Cost of debt | 4.0% - 4.5% | 4.25% |
WACC | 8.4% - 11.0% | 9.7% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 0.98 | 1.1 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 8.4% | 11.0% |
Tax rate | 22.7% | 24.1% |
Debt/Equity ratio | 0 | 0 |
Cost of debt | 4.0% | 4.5% |
After-tax WACC | 8.4% | 11.0% |
Selected WACC | 9.7% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
ITRN | Ituran Location and Control Ltd | 0 | 0.83 | 0.83 |
AVNW | Aviat Networks Inc | 0.16 | 0.44 | 0.39 |
CAMP | CalAmp Corp | 0.01 | 1.74 | 1.73 |
CASA | Casa Systems Inc | 54.32 | 0.4 | 0.01 |
CRNT | Ceragon Networks Ltd | 0.12 | 1.19 | 1.09 |
DGII | Digi International Inc | 0.1 | 1.34 | 1.24 |
ET.TO | Evertz Technologies Ltd | 0.02 | 0.88 | 0.86 |
EXF.TO | EXFO Inc | 0.14 | 1.47 | 1.33 |
HLIT | Harmonic Inc | 0.12 | 1.15 | 1.06 |
SWIR | Sierra Wireless Inc | 0.01 | 1.3 | 1.29 |
Low | High | |
Unlevered beta | 0.98 | 1.15 |
Relevered beta | 0.97 | 1.15 |
Adjusted relevered beta | 0.98 | 1.1 |
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 ITRN:
cost_of_equity (9.70%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.98) + 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.