What Is WACC (Weighted Average Cost of Capital)?
WACC is the average cost of the money a company uses to run its business. It blends the interest rate on borrowing with the return shareholders expect (the cost of equity), weighted by the capital mix. When the business return, ROIC, exceeds WACC, the company earns more than its cost of capital — in other words, it creates value.
WACC formula
WACC = E/V × Ke + D/V × Kd × (1 − tax rate)
Ke = Risk-free rate + Adjusted β × Market risk premium
- E: market value of equity (market cap), D: interest-bearing debt, V = E + D
- Ke: cost of equity, Kd: cost of debt (interest rate on borrowing)
- Interest expense reduces taxes, so the cost of debt is taken after tax.
Estimate WACC
Risk-free rate and premium default to Stock Club's current assumptions
WACC
Cost of equity 8.10% · Adjusted beta 1.00
5.98%
Beta is adjusted as "0.67 × β + 0.33" before use. Enter market cap and debt in the same unit.
Assumptions Stock Club uses
Current inputs to the cost-of-equity calculation. They change when the underlying tables are updated.
Risk-free rate
2.958%
10-year JGB yield (as of October 16, 2026)
Market risk premium
5.14%
Applied from January 5, 2026. Source: Aswath Damodaran, Country Default Spreads and Risk Premiums (ctryprem), Japan: Equity Risk Premium
Adjusted beta
0.67 × β + 0.33
Blume adjustment pulling extreme betas toward the market average of 1.
Current WACC distribution in Japan
Price date: October 19, 2026
WACC median
5.21%
IQR 4.07% – 6.33%
Cost of equity median
6.38%
Calculated for 3,922 stocks
ROIC above WACC
2,066 stocks
58.4% of 3,539 with both
Stocks with WACC
3,722 / 3,958
236 without WACC (see below)
WACC distribution
This covers Japanese stocks with a calculable WACC. ETFs and REITs are excluded. Each range includes its lower bound and excludes its upper bound (5–6% means at least 5% and below 6%).
Stocks without WACC
Blanks are never filled with zero; counts are shown by reason.
- Companies with a financing business
- 15stocks
- Other stocks without WACC
- 221stocks
Financing-arm borrowings distort the capital mix, so WACC is left blank. Cost of equity is still shown.
No beta available, a negative adjusted beta, or missing capital-structure data.
Banks, securities firms and insurers have no ROIC but do show WACC (equal to their cost of equity), so fewer stocks have both ROIC and WACC than have WACC alone.
Median WACC by sector
Sectors with at least 10 stocks with WACC. Levels vary with price volatility (beta) and the share of debt funding.
Examples from large-cap stocks
This is not a recommendation ranking. It connects beta, cost of equity, WACC and ROIC using actual data. Beta is shown before adjustment. Financials and others without ROIC show a dash.
- Price
- ¥3,478+0.09%
- β
- 1.39
- Cost of equity
- 9.43%
- WACC
- 9.43%
- ROIC
- -
- ROIC − WACC
- -
- Price
- ¥3,102+0.26%
- β
- 1.10
- Cost of equity
- 8.44%
- WACC
- 8.56%
- ROIC
- 5.8%
- ROIC − WACC
- -2.8 pts
- Price
- ¥4,845-2.00%
- β
- 1.38
- Cost of equity
- 9.41%
- WACC
- 4.67%
- ROIC
- -
- ROIC − WACC
- -
- Price
- ¥18,775+1.93%
- β
- 0.92
- Cost of equity
- 7.83%
- WACC
- 7.08%
- ROIC
- 24.4%
- ROIC − WACC
- +17.3 pts
- Price
- ¥5,773+0.05%
- β
- 1.42
- Cost of equity
- 9.54%
- WACC
- 8.64%
- ROIC
- 11.2%
- ROIC − WACC
- +2.5 pts
- Price
- ¥34,450-0.23%
- β
- 1.77
- Cost of equity
- 10.76%
- WACC
- 9.26%
- ROIC
- 49.3%
- ROIC − WACC
- +40.1 pts
- Price
- ¥3,274-0.06%
- β
- 1.34
- Cost of equity
- 9.27%
- WACC
- 9.27%
- ROIC
- -
- ROIC − WACC
- -
- Price
- ¥10,350-2.63%
- β
- 1.21
- Cost of equity
- 8.81%
- WACC
- 8.81%
- ROIC
- 22.5%
- ROIC − WACC
- +13.7 pts
WACC is used as the benchmark for the business return, ROIC. Compare Japanese companies by ROIC − WACC →
Reading WACC: the spread with ROIC
Value spread = ROIC − WACC
WACC
The average return required by capital providers — banks, bondholders and shareholders. The hurdle the business must clear.
ROIC
After-tax core profit relative to capital invested by both lenders and shareholders.
Positive spread
The company earns more than its cost of capital and can be read as creating value.
In valuation, WACC is also the rate used to discount future cash flows. Whether the spread is positive does not by itself decide an investment. ROIC guide covers the ROIC formula and Japanese market distribution.
The cost of equity (CAPM)
The cost of equity is the minimum return shareholders expect from the stock — for the company, the cost of raising money through shares. Because shareholders have no promised interest, they bear more risk, so it is usually higher than the interest rate on debt.
Cost of equity = Risk-free rate + Adjusted β × Market risk premium
Risk-free rate
A near-certain yield. Stock Club uses the 10-year JGB yield (currently 2.958%).
Beta
How much the stock moves relative to the market; above 1 means it moves more. Stock Club adjusts it as "0.67 × β + 0.33".
Market risk premium
The return the equity market is expected to earn above the risk-free rate; currently 5.14%.
ROE, the shareholder's rate of return, is read against this cost of equity. ROE guide covers the ROE formula and Japanese market distribution.
How Stock Club calculates WACC
Rules applying the same assumptions to every stock
- WACC = E/V × cost of equity + D/V × cost of debt × (1 − effective tax rate), where E is market capitalization, D is interest-bearing debt and V = E + D.
- Cost of equity = risk-free rate + adjusted beta × market risk premium (CAPM).
- The risk-free rate is the latest 10-year JGB yield; the market risk premium comes from a table with effective dates (see the assumptions above for current values).
- Adjusted beta = 0.67 × β + 0.33, reflecting the idea that beta drifts toward the market average of 1 over time.
- Cost of debt is interest expense divided by interest-bearing debt. For companies with no debt, WACC equals the cost of equity.
- For financials such as banks, securities firms and insurers, whose liability structure differs from operating companies, WACC is set equal to the cost of equity.
- Stocks without a beta or with a negative adjusted beta are blank. Operating companies with financing businesses show cost of equity but no WACC.
WACC is an estimate that changes with its assumptions. Figures are reference information for comparison under the same assumptions, not investment advice.
Caveats when using WACC
An assumption-driven estimate
WACC is estimated from assumptions such as the risk-free rate, beta and market risk premium. It changes with them, so use it for relative comparison under the same assumptions rather than as an absolute.
Beta comes from past price moves
Beta is estimated from historical price movements and varies with the period and market conditions. Stock Club uses an adjusted beta to temper extremes; stocks whose adjusted beta is still negative show neither cost of equity nor WACC.
Won't match company-disclosed WACC
WACC figures in integrated reports use each company's own assumptions and methods. Stock Club applies the same assumptions to every stock mechanically, so values may differ from company disclosures.
Compare with ROIC on the same base
WACC is the benchmark for ROIC. Stock Club calculates ROIC on the same debt-plus-equity base as WACC; see the ROIC guide for the method.
WACC FAQ
What is a typical WACC?
There is no universal level. It depends on interest rates, price volatility (beta), the share of debt funding and the assumed market risk premium. Because WACC is an estimate, compare it with peers calculated under the same assumptions rather than using it as an absolute.
How does WACC differ from the cost of equity?
The cost of equity is the return shareholders expect. WACC blends it with the after-tax cost of debt, weighted by market capitalization and interest-bearing debt, into the company's overall cost of funding. For a company with no debt, WACC equals the cost of equity.
What does ROIC above WACC tell me?
The company earns more on invested capital than its capital providers require, which can be read as creating value. The spread shifts with single-year results and assumptions, so check the trend and sector levels too.
What market risk premium does Stock Club use?
It is not a fixed number; it is kept in a table with effective dates. The current value and source are shown under "Assumptions Stock Club uses" on this page. The risk-free rate is the latest 10-year JGB yield.
Put WACC into practice
The cost-of-capital comparison lists ROIC, WACC and their spread for Japanese companies, filterable by sector, and also shows ROE against the cost of equity from the shareholder's view.
Help
Video guides
Short videos on what each page shows and how to read the metrics.
What ROIC and WACC mean, and how to read “Returns above the cost of capital”.
1:48 · with sound
Companies shown are examples. Past figures and company policies do not guarantee future results. Not investment advice.