TH.TO WACC - Weighted Average Cost of Capital
The WACC of Theratechnologies Inc (TH.TO) is 8.6%.
| Range | Selected | |
| Cost of equity | 6.1% - 9.0% | 7.55% |
| Tax rate | 0.6% - 1.3% | 0.95% |
| Cost of debt | 11.0% - 11.7% | 11.35% |
| WACC | 7.4% - 9.7% | 8.6% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.58 | 0.79 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.1% | 9.0% |
| Tax rate | 0.6% | 1.3% |
| Debt/Equity ratio | 0.38 | 0.38 |
| Cost of debt | 11.0% | 11.7% |
| After-tax WACC | 7.4% | 9.7% |
| Selected WACC | 8.6% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| TH.TO | Theratechnologies Inc | 0.38 | 1.06 | 0.77 |
| AQB | AquaBounty Technologies Inc | 1.08 | 0.43 | 0.21 |
| ATNX | Athenex Inc | 70.45 | 1.17 | 0.02 |
| AZYO | Aziyo Biologics Inc | 1 | -0.14 | -0.07 |
| FLXN | Flexion Therapeutics Inc | 0.5 | 1.56 | 1.04 |
| FREQ | Frequency Therapeutics Inc | 1.28 | 1.1 | 0.48 |
| OTLK | Outlook Therapeutics Inc | 0.62 | 0.5 | 0.31 |
| RCEL | AVITA Medical Inc | 0.25 | 1.93 | 1.55 |
| TNXP | Tonix Pharmaceuticals Holding Corp | 0.04 | 0.55 | 0.53 |
| TTOO | T2 Biosystems Inc | 9.05 | -1.41 | -0.14 |
| Low | High | |
| Unlevered beta | 0.27 | 0.5 |
| Relevered beta | 0.37 | 0.69 |
| Adjusted relevered beta | 0.58 | 0.79 |
TH.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 TH.TO:
cost_of_equity (7.55%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.58) + 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.