BME.L WACC - Weighted Average Cost of Capital

The WACC of B&M European Value Retail SA (BME.L) is 7.7%.

The Cost of Equity of B&M European Value Retail SA (BME.L) is 11.35%.

The Cost of Debt of B&M European Value Retail SA (BME.L) is 5.15%.

	Range	Selected
Cost of equity	9.40% - 13.30%	11.35%
Tax rate	20.00% - 22.50%	21.25%
Cost of debt	4.80% - 5.50%	5.15%
WACC	6.6% - 8.8%	7.7%

WACC

BME.L WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.9	1.19

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.40%	13.30%

Tax rate	20.00%	22.50%
Debt/Equity ratio	0.98	0.98
Cost of debt	4.80%	5.50%

After-tax WACC	6.6%	8.8%


Selected WACC	7.7%

BME.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 BME.L:

cost_of_equity (11.35%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.9) + 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.