SAP.TO WACC - Weighted Average Cost of Capital
The WACC of Saputo Inc (SAP.TO) is 5.1%.
| Range | Selected | |
| Cost of equity | 5.0% - 6.5% | 5.75% |
| Tax rate | 29.8% - 33.2% | 31.5% |
| Cost of debt | 4.0% - 4.6% | 4.3% |
| WACC | 4.4% - 5.7% | 5.1% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.35 | 0.38 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.0% | 6.5% |
| Tax rate | 29.8% | 33.2% |
| Debt/Equity ratio | 0.31 | 0.31 |
| Cost of debt | 4.0% | 4.6% |
| After-tax WACC | 4.4% | 5.7% |
| Selected WACC | 5.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| SAP.TO | Saputo Inc | 0.31 | 0.3 | 0.25 |
| CAG | Conagra Brands Inc | 0.84 | -0.18 | -0.11 |
| CPB | Campbell Soup Co | 0.77 | 0.08 | 0.05 |
| HRL | Hormel Foods Corp | 0.17 | 0.03 | 0.03 |
| HSY | Hershey Co | 0.14 | -0.11 | -0.1 |
| K | Kellogg Co | 0.21 | 0.03 | 0.03 |
| MKC | McCormick & Company Inc | 0.22 | 0.24 | 0.21 |
| POST | Post Holdings Inc | 1.12 | 0.05 | 0.03 |
| PPC | Pilgrims Pride Corp | 0.29 | 0.15 | 0.12 |
| SJM | J M Smucker Co | 0.69 | 0.11 | 0.08 |
| Low | High | |
| Unlevered beta | 0.03 | 0.06 |
| Relevered beta | 0.03 | 0.07 |
| Adjusted relevered beta | 0.35 | 0.38 |
SAP.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 SAP.TO:
cost_of_equity (5.75%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * 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.