Aecom WACC - Weighted Average Cost of Capital
The WACC of AECOM (ACM) is 7.9%.
| Range | Selected | |
| Cost of equity | 7.3% - 9.4% | 8.35% |
| Tax rate | 21.6% - 22.9% | 22.25% |
| Cost of debt | 5.1% - 8.0% | 6.55% |
| WACC | 6.8% - 8.9% | 7.9% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.74 | 0.81 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.3% | 9.4% |
| Tax rate | 21.6% | 22.9% |
| Debt/Equity ratio | 0.17 | 0.17 |
| Cost of debt | 5.1% | 8.0% |
| After-tax WACC | 6.8% | 8.9% |
| Selected WACC | 7.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| ACM | AECOM | 0.17 | 0.62 | 0.55 |
| ARCAD.AS | Arcadis NV | 0.27 | 0.53 | 0.44 |
| MGNS.L | Morgan Sindall Group PLC | 0.07 | 0.6 | 0.57 |
| AMRC | Ameresco Inc | 2.08 | 1.01 | 0.39 |
| ARE.TO | Aecon Group Inc | 0.38 | 0.69 | 0.53 |
| FLR | Fluor Corp | 0.17 | 1.24 | 1.09 |
| J | Jacobs Engineering Group Inc | 0.14 | 0.81 | 0.73 |
| NVEE | NV5 Global Inc | 0.17 | 0.39 | 0.34 |
| SNC.TO | SNC-Lavalin Group Inc | 0.47 | 1.13 | 0.83 |
| WSP.TO | WSP Global Inc | 0.16 | 0.9 | 0.8 |
| Low | High | |
| Unlevered beta | 0.54 | 0.63 |
| Relevered beta | 0.61 | 0.72 |
| Adjusted relevered beta | 0.74 | 0.81 |
Aecom'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 Aecom:
cost_of_equity (8.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.74) + 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.