Cost of Equity (Ke) Ranking for All Listed Companies!

WACC (Weighted Average Cost of Capital) is the weighted average of the cost of equity (Ke) and the cost of debt (Kd) adjusted for tax effects (Kd × (1 - statutory effective tax rate)), based on the market-value-based capital structure.

beluuga.ai calculates Ke, one of these components, precisely for all target companies, and you can even check the breakdown (Rf, β, ERP) on each company's page.

Using this data, I have ranked 3,512 domestic listed companies (excluding financial institutions such as banks, securities, and insurance companies, as well as REITs) by Ke.

The company with the highest Ke is Abalance (Solar panel manufacturing business, 3856) with Ke=47.39%, and the company with the lowest is Hokuriku Gas (9537) with Ke=4.38%.

Please see this article for detailed calculation methods and assumptions.

A high Ke comes with corresponding risk factors.

It is not entirely off the mark to intuitively think, when looking at the companies lined up at the top, that these are companies with high financial risk.

However, what CAPM incorporates into the shareholder's required return is not the total volatility of the stock price or company-specific risk, but the 'market-linked risk (systematic risk)' that cannot be eliminated even through diversified investment.

CAPM is expressed by the formula Ke = Rf + β × ERP, and β is the sensitivity indicating how much a company's stock return reacts to fluctuations in the overall market. For companies with a high Ke, this β is estimated to be high.

There are multiple factors behind a high Ke, such as financial leverage, cyclicality, business risk, operating leverage, and the instability of the estimated β. Since we use the calculation formula that relevers the industry average β with the individual company's D/E (interest-bearing debt ÷ market capitalization) (βL = βU × (1 + (1 - statutory effective tax rate) × D/E)), the relationship where a higher D/E leads to a higher Ke is built into the formula.

For the companies ranked at the top this time, a high D/E is the main factor pushing up the Ke in the calculation. The 1st place Abalance has a D/E of 7.1x, the 5th place Nissan Motor has a D/E of 7.1x, and the 4th place NSG Group has a D/E of 12.4x.

Shareholders are residual claimants with a lower priority for repayment than creditors. Even when business performance or cash flow deteriorates, the payment of principal and interest takes precedence over distributions to shareholders. Therefore, the more debt there is, the more the fluctuations in profits and cash flow attributable to shareholders are amplified.

However, this is only one factor of market-linked risk, and a high Ke does not directly measure the company's default risk or the danger of its cash flow situation.

This figure is a snapshot at a certain point in time.

The denominator of D/E (interest-bearing debt ÷ market capitalization) is the stock price on that day.

Assuming other calculation conditions (interest-bearing debt amount, unlevered β, statutory effective tax rate, Rf, ERP, number of issued shares) remain unchanged, even a decline in the stock price alone will mechanically increase the D/E, and the estimated Ke will rise through the relevered β.

Regarding Abalance, which was ranked 1st, if we calculate starting from a Ke of approximately 46.2% as of August 9, 2026, assuming other conditions are constant, if the stock price falls by 10%, the Ke will be approximately 50.2%, and if it falls by 20%, it will be approximately 55.2%. Conversely, if the stock price rises by 20%, it will be approximately 40.2%.

However, this is not just about momentary price movements. If that price level continues for a certain period, it may be the result of the market continuously evaluating the company's financial situation and earnings outlook.

However, market prices also reflect various factors other than debt and performance, such as growth expectations, interest rates, supply and demand, liquidity, and news.

Note that this characteristic of "moving mechanically in response to stock prices" applies particularly strongly to the group of companies at the top of this list (companies where the reliability of measured data is low, and calculations are recalculated from industry averages using individual company D/E ratios). For the majority of companies, we use measured beta estimated from stock returns over a certain period, so today's stock price level is not directly reflected in Ke through D/E. However, as the estimation period is updated, the latest stock price fluctuations may be gradually reflected in beta.

However, Ke is an estimate of the shareholders' required rate of return, not the company's earning power itself.

Next time, we will compare this Ke with actual profitability (ROE) and look at how many companies are failing to meet their cost of equity.

Data Assumptions

• Scope: 3,512 domestic listed companies (excluding financial institutions such as banks, securities, and insurance companies, and REITs)

• Stock price and market capitalization reference date: August 5, 2026

• Ke calculation reference date: August 5, 2026 (Rf=2.80%, ERP=5.14%, statutory effective tax rate=30.62%)

• LTM period: Latest 12 months for each company (fiscal periods vary by company)

• Source/Calculation: beluuga.ai

You can perform cross-sectional analysis of approximately 4,200 domestic listed companies with beluuga.ai. You can try a free demo of Ke/WACC analysis for each company.

Author/Calculation: Shinji Takeuchi

Founder and CEO of Beluuga AI Inc. Engaged in M&A business since 1998. Developed beluuga.ai based on practical experience at Lehman Brothers, Morgan Stanley (Tokyo and New York), and a PE fund he founded himself.