The WACC of AVEVA Group PLC (AVV.L) is 8.1%.
Range | Selected | |
Cost of equity | 6.5% - 10.2% | 8.35% |
Tax rate | 26.1% - 27.5% | 26.8% |
Cost of debt | 7.1% - 7.1% | 7.1% |
WACC | 6.4% - 9.8% | 8.1% |
Category | Low | High |
Long-term bond rate | 4.0% | 4.5% |
Equity market risk premium | 6.0% | 7.0% |
Adjusted beta | 0.42 | 0.75 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.5% | 10.2% |
Tax rate | 26.1% | 27.5% |
Debt/Equity ratio | 0.08 | 0.08 |
Cost of debt | 7.1% | 7.1% |
After-tax WACC | 6.4% | 9.8% |
Selected WACC | 8.1% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
AVV.L | AVEVA Group PLC | 0.08 | 0.73 | 0.69 |
BYIT.L | Bytes Technology Group PLC | 0 | 0.91 | 0.91 |
CLXN.SW | Crealogix Holding AG | 0.47 | 0.25 | 0.19 |
EFECTE.HE | Efecte Oyj | 0.02 | -1.1 | -1.09 |
FDP.L | First Derivatives PLC | 0.01 | 0.53 | 0.52 |
GBG.L | GB Group PLC | 0.13 | 1.5 | 1.37 |
GHT.L | Gresham Technologies PLC | 0.01 | 0.05 | 0.05 |
RM.L | RM PLC | 0.99 | -0.61 | -0.35 |
SINCH.ST | Sinch AB (publ) | 0.29 | 1.58 | 1.31 |
XPR.MI | Exprivia SpA | 0.45 | -0.07 | -0.05 |
Low | High | |
Unlevered beta | 0.13 | 0.59 |
Relevered beta | 0.13 | 0.63 |
Adjusted relevered beta | 0.42 | 0.75 |
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 AVV.L:
cost_of_equity (8.35%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.42) + 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.