TH.TO WACC - Weighted Average Cost of Capital

The WACC of Theratechnologies Inc (TH.TO) is 8.5%.

The Cost of Equity of Theratechnologies Inc (TH.TO) is 7.40%.

The Cost of Debt of Theratechnologies Inc (TH.TO) is 11.35%.

	Range	Selected
Cost of equity	5.90% - 8.90%	7.40%
Tax rate	0.60% - 1.30%	0.95%
Cost of debt	11.00% - 11.70%	11.35%
WACC	7.3% - 9.6%	8.5%

WACC

TH.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.54	0.77

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.90%	8.90%

Tax rate	0.60%	1.30%
Debt/Equity ratio	0.38	0.38
Cost of debt	11.00%	11.70%

After-tax WACC	7.3%	9.6%


Selected WACC	8.5%

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 (7.40%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.54) + 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.