The WACC of Arrow Global Group PLC (ARW.L) is 4.9%.
Range | Selected | |
Cost of equity | 5.1% - 9.5% | 7.3% |
Tax rate | 20.0% - 22.7% | 21.35% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 4.3% - 5.5% | 4.9% |
Category | Low | High |
Long-term bond rate | 2.9% | 3.4% |
Equity market risk premium | 5.3% | 6.3% |
Adjusted beta | 0.41 | 0.87 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 5.1% | 9.5% |
Tax rate | 20.0% | 22.7% |
Debt/Equity ratio | 2.53 | 2.53 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 4.3% | 5.5% |
Selected WACC | 4.9% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
ARW.L | Arrow Global Group PLC | 2.53 | 2.31 | 0.77 |
B2H.OL | B2holding ASA | 4.17 | 0.4 | 0.09 |
DDM.ST | DDM Holding AG | 7.44 | 0.06 | 0.01 |
FCH.L | Funding Circle Holdings PLC | 0.32 | 1.27 | 1.02 |
FFI.WA | Fast Finance SA w restrukturyzacji | 3.05 | 0 | 0 |
FRU.DE | Ferratum Oyj | 4.48 | 1.27 | 0.28 |
HAT.L | H & T Group PLC | 0.32 | 0.57 | 0.45 |
KRU.WA | Kruk SA | 0.85 | 0.68 | 0.41 |
MBC.DE | MyBucks SA | 126.78 | 1.49 | 0.01 |
NSF.L | Non-Standard Finance PLC | 2100.1 | 3.51 | 0 |
PBF.WA | PBS Finanse SA | 0.87 | -0.51 | -0.3 |
Low | High | |
Unlevered beta | 0.01 | 0.28 |
Relevered beta | 0.12 | 0.81 |
Adjusted relevered beta | 0.41 | 0.87 |
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 ARW.L:
cost_of_equity (7.30%) = risk_free_rate (3.15%) + equity_risk_premium (5.80%) * adjusted_beta (0.41) + 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.