RCH.TO WACC - Weighted Average Cost of Capital
The WACC of Richelieu Hardware Ltd (RCH.TO) is 8.2%.
| Range | Selected | |
| Cost of equity | 7.4% - 10.4% | 8.9% |
| Tax rate | 26.8% - 27.0% | 26.9% |
| Cost of debt | 4.0% - 4.5% | 4.25% |
| WACC | 6.9% - 9.5% | 8.2% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.83 | 1.02 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.4% | 10.4% |
| Tax rate | 26.8% | 27.0% |
| Debt/Equity ratio | 0.13 | 0.13 |
| Cost of debt | 4.0% | 4.5% |
| After-tax WACC | 6.9% | 9.5% |
| Selected WACC | 8.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| RCH.TO | Richelieu Hardware Ltd | 0.13 | 0.75 | 0.68 |
| ALTG | Alta Equipment Group Inc | 4.07 | 0.11 | 0.03 |
| DXPE | DXP Enterprises Inc | 0.45 | 1.82 | 1.37 |
| GFN | General Finance Corp | 0.66 | 1.5 | 1.01 |
| HDI.TO | Hardwoods Distribution Inc | 1.17 | 1.71 | 0.92 |
| HEES | H&E Equipment Services Inc | 0.42 | 1.51 | 1.16 |
| TGH | Textainer Group Holdings Ltd | 2.41 | -0.37 | -0.13 |
| WGEI | WindGen Energy Inc | 890.44 | -0.17 | 0 |
| BOSN.SW | Bossard Holding AG | 0.26 | 0.79 | 0.67 |
| BUFAB.ST | Bufab AB (publ) | 0.19 | 1.1 | 0.96 |
| Low | High | |
| Unlevered beta | 0.68 | 0.94 |
| Relevered beta | 0.75 | 1.03 |
| Adjusted relevered beta | 0.83 | 1.02 |
RCH.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 RCH.TO:
cost_of_equity (8.90%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.83) + 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.