SJ.TO WACC - Weighted Average Cost of Capital

The WACC of Stella-Jones Inc (SJ.TO) is 6.4%.

The Cost of Equity of Stella-Jones Inc (SJ.TO) is 7.70%.

The Cost of Debt of Stella-Jones Inc (SJ.TO) is 4.45%.

	Range	Selected
Cost of equity	6.40% - 9.00%	7.70%
Tax rate	24.80% - 25.50%	25.15%
Cost of debt	4.40% - 4.50%	4.45%
WACC	5.5% - 7.4%	6.4%

WACC

SJ.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.64	0.79

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.40%	9.00%

Tax rate	24.80%	25.50%
Debt/Equity ratio	0.41	0.41
Cost of debt	4.40%	4.50%

After-tax WACC	5.5%	7.4%


Selected WACC	6.4%

SJ.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 SJ.TO:

cost_of_equity (7.70%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.64) + 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.