TWE.AX WACC - Weighted Average Cost of Capital
The WACC of Treasury Wine Estates Ltd (TWE.AX) is 9.6%.
| Range | Selected | |
| Cost of equity | 8.8% - 13.9% | 11.35% |
| Tax rate | 29.5% - 29.8% | 29.65% |
| Cost of debt | 4.0% - 7.0% | 5.5% |
| WACC | 7.4% - 11.9% | 9.6% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.93 | 1.46 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.8% | 13.9% |
| Tax rate | 29.5% | 29.8% |
| Debt/Equity ratio | 0.29 | 0.29 |
| Cost of debt | 4.0% | 7.0% |
| After-tax WACC | 7.4% | 11.9% |
| Selected WACC | 9.6% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| TWE.AX | Treasury Wine Estates Ltd | 0.29 | 1.2 | 1 |
| 000080.KS | HiteJinro Co Ltd | 0.79 | 0.36 | 0.23 |
| 000860.SZ | Beijing Shunxin Agriculture Co Ltd | 0.39 | 1.85 | 1.46 |
| 2531.T | Takara Holdings Inc | 0.24 | 0.22 | 0.19 |
| 600779.SS | Sichuan Swellfun Co Ltd | 0 | 1.95 | 1.95 |
| 603198.SS | Anhui Yingjia Distillery Co Ltd | 0.02 | 1.76 | 1.74 |
| 603369.SS | Jiangsu King's Luck Brewery Joint-Stock Co Ltd | 0.03 | 1.56 | 1.53 |
| 603589.SS | Anhui Kouzi Distillery Co Ltd | 0.02 | 1.39 | 1.37 |
| AVG.AX | Australian Vintage Ltd | 4.25 | 0.26 | 0.06 |
| LRK.AX | Lark Distilling Co Ltd | 0.03 | 0.37 | 0.36 |
| Low | High | |
| Unlevered beta | 0.74 | 1.4 |
| Relevered beta | 0.9 | 1.69 |
| Adjusted relevered beta | 0.93 | 1.46 |
TWE.AX'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 TWE.AX:
cost_of_equity (11.35%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.93) + 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.