The WACC of St Galler Kantonalbank AG (SGKN.SW) is 4.4%.
| Range | Selected | |
| Cost of equity | 3.80% - 6.20% | 5.00% |
| Tax rate | 16.50% - 16.80% | 16.65% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 4.1% - 4.6% | 4.4% |
| Category | Low | High |
| Long-term bond rate | 1.1% | 1.6% |
| Equity market risk premium | 4.7% | 5.7% |
| Adjusted beta | 0.57 | 0.7 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 3.80% | 6.20% |
| Tax rate | 16.50% | 16.80% |
| Debt/Equity ratio | 3.26 | 3.26 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 4.1% | 4.6% |
| Selected WACC | 4.4% | |
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 SGKN.SW:
cost_of_equity (5.00%) = risk_free_rate (1.35%) + equity_risk_premium (5.20%) * 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.