The WACC of Adams PLC (ADA.L) is 7.0%.
Range | Selected | |
Cost of equity | 7.5% - 12.4% | 9.95% |
Tax rate | 19.0% - 19.0% | 19% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 5.8% - 8.2% | 7.0% |
Category | Low | High |
Long-term bond rate | 4.0% | 4.5% |
Equity market risk premium | 6.0% | 7.0% |
Adjusted beta | 0.58 | 1.06 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 7.5% | 12.4% |
Tax rate | 19.0% | 19.0% |
Debt/Equity ratio | 1 | 1 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 5.8% | 8.2% |
Selected WACC | 7.0% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
ADA.L | Adams PLC | 0.96 | 0.57 | 0.32 |
BLU.WA | Blumerang Investors SA | 0.81 | -1.49 | -0.9 |
CNLCAP.AT | CNL Capital EKES AIFM | 0.86 | 0.18 | 0.11 |
GEQ.MI | Gequity SpA | 1.66 | 0.18 | 0.08 |
LOUD.HE | Loudspring Plc | 0.5 | 1.06 | 0.76 |
MAFL.L | Mineral & Financial Investments Ltd | 0 | 0.18 | 0.18 |
MARKA.IS | Marka Yatirim Holding AS | 0 | 1.62 | 1.62 |
MWT.WA | M.W. Trade SA | 0.06 | 0.35 | 0.33 |
NEWN.SW | New Value AG | 0.19 | 1.15 | 1 |
RHEAG.IS | Rhea Girisim Sermayesi Yatirim Ortakligi AS | 0.11 | 0.73 | 0.67 |
Low | High | |
Unlevered beta | 0.26 | 0.47 |
Relevered beta | 0.37 | 1.09 |
Adjusted relevered beta | 0.58 | 1.06 |
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 ADA.L:
cost_of_equity (9.95%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.58) + 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.