BARC.L WACC - Weighted Average Cost of Capital
The WACC of Barclays PLC (BARC.L) is 6.4%.
| Range | Selected | |
| Cost of equity | 16.9% - 22.3% | 19.6% |
| Tax rate | 17.2% - 19.2% | 18.2% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 6.0% - 6.7% | 6.4% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 2.15 | 2.48 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 16.9% | 22.3% |
| Tax rate | 17.2% | 19.2% |
| Debt/Equity ratio | 5.78 | 5.78 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 6.0% | 6.7% |
| Selected WACC | 6.4% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| BARC.L | Barclays PLC | 5.78 | 1.79 | 0.31 |
| CABK.MC | Caixabank SA | 1.09 | 1.24 | 0.66 |
| DANSKE.CO | Danske Bank A/S | 6.5 | 0.49 | 0.08 |
| EBS.VI | Erste Group Bank AG | 2.23 | 1.44 | 0.51 |
| GLE.PA | Societe Generale SA | 1.85 | 1.62 | 0.65 |
| ISP.MI | Intesa Sanpaolo SpA | 2.1 | 1.25 | 0.46 |
| NWG.L | Natwest Group PLC | 2.79 | 1.6 | 0.49 |
| OTP.BD | OTP Bank Nyrt | 0.42 | 1.49 | 1.11 |
| PKO.WA | Powszechna Kasa Oszczednosci Bank Polski SA | 0.3 | 1.46 | 1.17 |
| STAN.L | Standard Chartered PLC | 4.17 | 1.63 | 0.37 |
| Low | High | |
| Unlevered beta | 0.48 | 0.56 |
| Relevered beta | 2.72 | 3.21 |
| Adjusted relevered beta | 2.15 | 2.48 |
BARC.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 BARC.L:
cost_of_equity (19.60%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (2.15) + 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.