TH.TO WACC - Weighted Average Cost of Capital

The WACC of Theratechnologies Inc (TH.TO) is 8.6%.

The Cost of Equity of Theratechnologies Inc (TH.TO) is 7.25%.

The Cost of Debt of Theratechnologies Inc (TH.TO) is 12.95%.

	Range	Selected
Cost of equity	5.70% - 8.80%	7.25%
Tax rate	0.60% - 1.30%	0.95%
Cost of debt	11.00% - 14.90%	12.95%
WACC	6.9% - 10.2%	8.6%

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	0.49	0.76

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.70%	8.80%

Tax rate	0.60%	1.30%
Debt/Equity ratio	0.31	0.31
Cost of debt	11.00%	14.90%

After-tax WACC	6.9%	10.2%


Selected WACC	8.6%

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 (7.25%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.49) + 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.