The WACC of Mainfreight Ltd (MFT.NZ) is 8.2%.
Range | Selected | |
Cost of equity | 7.6% - 10.7% | 9.15% |
Tax rate | 27.9% - 28.4% | 28.15% |
Cost of debt | 4.0% - 7.0% | 5.5% |
WACC | 6.8% - 9.7% | 8.2% |
Category | Low | High |
Long-term bond rate | 4.3% | 4.8% |
Equity market risk premium | 5.1% | 6.1% |
Adjusted beta | 0.64 | 0.88 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 7.6% | 10.7% |
Tax rate | 27.9% | 28.4% |
Debt/Equity ratio | 0.21 | 0.21 |
Cost of debt | 4.0% | 7.0% |
After-tax WACC | 6.8% | 9.7% |
Selected WACC | 8.2% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
MFT.NZ | Mainfreight Ltd | 0.21 | 1.12 | 0.97 |
002320.KS | Hanjin Transportation Co Ltd | 6.28 | 0.49 | 0.09 |
002468.SZ | STO Express Co Ltd | 0.42 | 0.54 | 0.42 |
2384.T | SBS Holdings Inc | 0.87 | 0.63 | 0.39 |
603128.SS | CTS International Logistics Corp Ltd | 0.18 | 1.07 | 0.94 |
9025.T | Konoike Transport Co Ltd | 0.34 | 1.02 | 0.82 |
9302.T | Mitsui Soko Holdings Co Ltd | 0.31 | 0.23 | 0.19 |
FRE.NZ | Freightways Ltd | 0.43 | 1.36 | 1.04 |
S08.SI | Singapore Post Ltd | 0.69 | 0.95 | 0.64 |
TLL.NZ | TIL Logistics Group Ltd | 2 | 0.84 | 0.35 |
Low | High | |
Unlevered beta | 0.41 | 0.71 |
Relevered beta | 0.46 | 0.82 |
Adjusted relevered beta | 0.64 | 0.88 |
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 MFT.NZ:
cost_of_equity (9.15%) = risk_free_rate (4.55%) + equity_risk_premium (5.60%) * adjusted_beta (0.64) + 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.