AUTO.L WACC - Weighted Average Cost of Capital
The WACC of Auto Trader Group PLC (AUTO.L) is 8.2%.
| Range | Selected | |
| Cost of equity | 7.2% - 9.2% | 8.2% |
| Tax rate | 18.8% - 19.4% | 19.1% |
| Cost of debt | 4.6% - 10.4% | 7.5% |
| WACC | 7.2% - 9.2% | 8.2% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.54 | 0.61 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.2% | 9.2% |
| Tax rate | 18.8% | 19.4% |
| Debt/Equity ratio | 0 | 0 |
| Cost of debt | 4.6% | 10.4% |
| After-tax WACC | 7.2% | 9.2% |
| Selected WACC | 8.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| AUTO.L | Auto Trader Group PLC | 0 | 0.68 | 0.68 |
| BOOM.L | Audioboom Group PLC | 0.01 | 1.87 | 1.85 |
| CTM.ST | Catena Media PLC | 1.76 | 0.52 | 0.22 |
| G24.DE | Scout24 AG | 0.02 | 0.36 | 0.35 |
| MYRK.DE | MyHammer Holding AG | 0.01 | 0.16 | 0.16 |
| NWO.DE | New Work SE | 0.14 | 0.44 | 0.4 |
| OTMP.L | Onthemarket PLC | 0.01 | -0.88 | -0.87 |
| READ.ST | Readly International AB (publ) | 0 | 1.24 | 1.24 |
| RMV.L | Rightmove PLC | 0 | 0.43 | 0.43 |
| WPL.WA | Wirtualna Polska Holding SA | 0.25 | 0.29 | 0.24 |
| Low | High | |
| Unlevered beta | 0.31 | 0.41 |
| Relevered beta | 0.31 | 0.42 |
| Adjusted relevered beta | 0.54 | 0.61 |
AUTO.L'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 AUTO.L:
cost_of_equity (8.20%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.54) + 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.