The WACC of Aramex PJSC (ARMX.DB) is 9.7%.
| Range | Selected | |
| Cost of equity | 10.20% - 13.00% | 11.60% |
| Tax rate | 21.00% - 27.30% | 24.15% |
| Cost of debt | 5.00% - 9.50% | 7.25% |
| WACC | 8.2% - 11.1% | 9.7% |
| Category | Low | High |
| Long-term bond rate | 5.9% | 6.4% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 0.74 | 0.9 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.20% | 13.00% |
| Tax rate | 21.00% | 27.30% |
| Debt/Equity ratio | 0.46 | 0.46 |
| Cost of debt | 5.00% | 9.50% |
| After-tax WACC | 8.2% | 11.1% |
| Selected WACC | 9.7% | |
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 ARMX.DB:
cost_of_equity (11.60%) = risk_free_rate (6.15%) + equity_risk_premium (6.30%) * 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.