POLA WACC - Weighted Average Cost of Capital
The WACC of Polar Power Inc (POLA) is 5.6%.
| Range | Selected | |
| Cost of equity | 6.5% - 8.9% | 7.7% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.0% - 6.1% | 5.6% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.57 | 0.72 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.5% | 8.9% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 1.12 | 1.12 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.0% | 6.1% |
| Selected WACC | 5.6% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| POLA | Polar Power Inc | 1.12 | 1.54 | 0.85 |
| BWEN | Broadwind Inc | 0.4 | 0.32 | 0.25 |
| CAPC | Capstone Companies Inc | 0.13 | 0.24 | 0.22 |
| CETY | Clean Energy Technologies Inc | 0.22 | 0.66 | 0.57 |
| EGT.V | Eguana Technologies Inc | 7.94 | -0.88 | -0.13 |
| EHT.V | EnerDynamic Hybrid Technologies Corp | 1.92 | 1.02 | 0.42 |
| GCHT | Gc China Turbine Corp | 0.6 | 0 | 0 |
| PPSI | Pioneer Power Solutions Inc | 0.01 | 1.95 | 1.94 |
| TPIC | TPI Composites Inc | 10.79 | 1.5 | 0.17 |
| SAE.L | SIMEC Atlantis Energy Ltd | 3.26 | -1.08 | -0.32 |
| Low | High | |
| Unlevered beta | 0.2 | 0.32 |
| Relevered beta | 0.36 | 0.58 |
| Adjusted relevered beta | 0.57 | 0.72 |
POLA'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 POLA:
cost_of_equity (7.70%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.57) + 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.