RTON WACC - Weighted Average Cost of Capital
The WACC of Right On Brands Inc (RTON) is 6.0%.
| Range | Selected | |
| Cost of equity | 5.5% - 8.5% | 7% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.0% - 7.1% | 6.0% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.35 | 0.66 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.5% | 8.5% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 0.4 | 0.4 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.0% | 7.1% |
| Selected WACC | 6.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| RTON | Right On Brands Inc | 0.4 | 0.96 | 0.75 |
| BCI.TO | New Look Vision Group Inc | 0.47 | 1.05 | 0.78 |
| BWTL | Bowlin Travel Centers Inc | 0.45 | 0.03 | 0.02 |
| CLWY | Calloway's Nursery Inc | 0.1 | -0.34 | -0.31 |
| ELA | Envela Corp | 0.08 | 0.65 | 0.61 |
| FAF.TO | Fire & Flower Holdings Corp | 2.38 | 1.38 | 0.5 |
| IDG.TO | Indigo Books and Music Inc | 7.22 | -0.8 | -0.13 |
| SPWH | Sportsmans Warehouse Holdings Inc | 1.3 | -0.34 | -0.18 |
| TCS | Container Store Group Inc | 256.2 | 1.69 | 0.01 |
| WCRS | Western Capital Resources Inc | 0.04 | 0.3 | 0.29 |
| Low | High | |
| Unlevered beta | 0.02 | 0.38 |
| Relevered beta | 0.03 | 0.49 |
| Adjusted relevered beta | 0.35 | 0.66 |
RTON'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 RTON:
cost_of_equity (7.00%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.35) + 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.