SHC WACC - Weighted Average Cost of Capital

The WACC of Sotera Health Co (SHC) is 8.7%.

The Cost of Equity of Sotera Health Co (SHC) is 11.50%.

The Cost of Debt of Sotera Health Co (SHC) is 7.25%.

	Range	Selected
Cost of equity	10.10% - 12.90%	11.50%
Tax rate	41.60% - 48.90%	45.25%
Cost of debt	7.00% - 7.50%	7.25%
WACC	7.8% - 9.5%	8.7%

WACC

SHC WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	1.35	1.43

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.10%	12.90%

Tax rate	41.60%	48.90%
Debt/Equity ratio	0.6	0.6
Cost of debt	7.00%	7.50%

After-tax WACC	7.8%	9.5%


Selected WACC	8.7%

SHC'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 SHC:

cost_of_equity (11.50%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.35) + 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.