The WACC of Roctool SA (ALROC.PA) is 6.7%.
Range | Selected | |
Cost of equity | 7.8% - 11.1% | 9.45% |
Tax rate | 0.8% - 1.2% | 1% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 6.1% - 7.3% | 6.7% |
Category | Low | High |
Long-term bond rate | 3.0% | 3.5% |
Equity market risk premium | 5.8% | 6.8% |
Adjusted beta | 0.82 | 1.04 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 7.8% | 11.1% |
Tax rate | 0.8% | 1.2% |
Debt/Equity ratio | 1.56 | 1.56 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 6.1% | 7.3% |
Selected WACC | 6.7% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
ALROC.PA | Roctool SA | 1.56 | 0.5 | 0.2 |
ALGEV.PA | Gevelot SA | 0.04 | 0.42 | 0.41 |
ALHIO.PA | Hiolle Industries SA | 0.48 | 0.92 | 0.62 |
ALTUV.PA | Bio-UV Group SA | 1.02 | 0.33 | 0.17 |
BALYO.PA | Balyo SA | 0.29 | 0.27 | 0.21 |
BOOST.PA | Boostheat SAS | 2.21 | 0.99 | 0.31 |
GOE.PA | Groupe Gorge SA | 1.11 | 1.28 | 0.61 |
MCPHY.PA | McPhy Energy SAS | 0.11 | 1.41 | 1.28 |
PREC.PA | Precia SA | 0.17 | 0.3 | 0.25 |
PWG.PA | Prodways Group SA | 0.64 | 0.69 | 0.43 |
Low | High | |
Unlevered beta | 0.29 | 0.41 |
Relevered beta | 0.73 | 1.06 |
Adjusted relevered beta | 0.82 | 1.04 |
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 ALROC.PA:
cost_of_equity (9.45%) = risk_free_rate (3.25%) + equity_risk_premium (6.30%) * adjusted_beta (0.82) + 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.