PBH.TO WACC - Weighted Average Cost of Capital

The WACC of Premium Brands Holdings Corp (PBH.TO) is 5.5%.

The Cost of Equity of Premium Brands Holdings Corp (PBH.TO) is 6.70%.

The Cost of Debt of Premium Brands Holdings Corp (PBH.TO) is 5.70%.

	Range	Selected
Cost of equity	5.50% - 7.90%	6.70%
Tax rate	26.40% - 27.90%	27.15%
Cost of debt	4.60% - 6.80%	5.70%
WACC	4.5% - 6.4%	5.5%

WACC

PBH.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.46	0.61

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.50%	7.90%

Tax rate	26.40%	27.90%
Debt/Equity ratio	0.94	0.94
Cost of debt	4.60%	6.80%

After-tax WACC	4.5%	6.4%


Selected WACC	5.5%

PBH.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 PBH.TO:

cost_of_equity (6.70%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.46) + 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.