SNDL WACC - Weighted Average Cost of Capital
The WACC of Sundial Growers Inc (SNDL) is 8.3%.
| Range | Selected | |
| Cost of equity | 7.8% - 11.1% | 9.45% |
| Tax rate | 1.2% - 2.5% | 1.85% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 7.1% - 9.5% | 8.3% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.85 | 1.11 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.8% | 11.1% |
| Tax rate | 1.2% | 2.5% |
| Debt/Equity ratio | 0.33 | 0.33 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 7.1% | 9.5% |
| Selected WACC | 8.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| SNDL | Sundial Growers Inc | 0.33 | 0.39 | 0.29 |
| ACB.TO | Aurora Cannabis Inc | 0.28 | 1.52 | 1.19 |
| BDSI | BioDelivery Sciences International Inc | 0.11 | 0.55 | 0.5 |
| CWEB.TO | Charlotte's Web Holdings Inc | 3.36 | 0.66 | 0.15 |
| GUD.TO | Knight Therapeutics Inc | 0.09 | 0.46 | 0.43 |
| HITI.V | High Tide Inc | 0.28 | 1.78 | 1.4 |
| HRMY | Harmony Biosciences Holdings Inc | 0.09 | 1.2 | 1.1 |
| PCRX | Pacira Biosciences Inc | 0.5 | 0.96 | 0.64 |
| TBPH | Theravance Biopharma Inc | 0.07 | 1.04 | 0.97 |
| ZGNX | Zogenix Inc | 0.11 | 0.9 | 0.82 |
| Low | High | |
| Unlevered beta | 0.58 | 0.88 |
| Relevered beta | 0.78 | 1.16 |
| Adjusted relevered beta | 0.85 | 1.11 |
SNDL'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 SNDL:
cost_of_equity (9.45%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.85) + 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.