The WACC of Swiss Water Decaffeinated Coffee Inc (SWP.TO) is 5.5%.
Range | Selected | |
Cost of equity | 8.0% - 14.3% | 11.15% |
Tax rate | 26.5% - 34.5% | 30.5% |
Cost of debt | 4.8% - 6.8% | 5.8% |
WACC | 4.5% - 6.5% | 5.5% |
Category | Low | High |
Long-term bond rate | 3.2% | 3.7% |
Equity market risk premium | 5.1% | 6.1% |
Adjusted beta | 0.96 | 1.66 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 8.0% | 14.3% |
Tax rate | 26.5% | 34.5% |
Debt/Equity ratio | 3.79 | 3.79 |
Cost of debt | 4.8% | 6.8% |
After-tax WACC | 4.5% | 6.5% |
Selected WACC | 5.5% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
SWP.TO | Swiss Water Decaffeinated Coffee Inc | 3.79 | 0.7 | 0.19 |
AMNF | Armanino Foods Of Distinction Inc | 0.01 | 0.06 | 0.06 |
ANPFF | Anpulo Food Inc | 0.84 | 0.93 | 0.58 |
BSFC | Blue Star Foods Corp | 1.15 | 1.41 | 0.77 |
ELAMF | Elamex SA de CV | 0.46 | 0.08 | 0.06 |
LUCC | Luca Inc | 0.17 | 1.1 | 0.98 |
PETZ | TDH Holdings Inc | 0.03 | 0.55 | 0.54 |
PLIN | China Xiangtai Food Co Ltd | 0.02 | 1.1 | 1.08 |
RMCF | Rocky Mountain Chocolate Factory Inc (Delaware) | 0.12 | 0.32 | 0.29 |
TOFB | Tofutti Brands Inc | 0.01 | 0.53 | 0.53 |
Low | High | |
Unlevered beta | 0.43 | 0.55 |
Relevered beta | 0.94 | 1.99 |
Adjusted relevered beta | 0.96 | 1.66 |
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 SWP.TO:
cost_of_equity (11.15%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.96) + 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.