AZUL
Azul SA
Price:  
0.73 
USD
Volume:  
8,846,811.00
Brazil | Airlines
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AZUL WACC - Weighted Average Cost of Capital

The WACC of Azul SA (AZUL) is 7.8%.

The Cost of Equity of Azul SA (AZUL) is 10.45%.
The Cost of Debt of Azul SA (AZUL) is 7.75%.

Range Selected
Cost of equity 6.40% - 14.50% 10.45%
Tax rate 0.30% - 1.00% 0.65%
Cost of debt 6.40% - 9.10% 7.75%
WACC 6.4% - 9.3% 7.8%
WACC

AZUL WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.54 1.72
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.40% 14.50%
Tax rate 0.30% 1.00%
Debt/Equity ratio 19.61 19.61
Cost of debt 6.40% 9.10%
After-tax WACC 6.4% 9.3%
Selected WACC 7.8%

AZUL'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 AZUL:

cost_of_equity (10.45%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * 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.