The WACC of Burberry Group PLC (BRBY.L) is 8.6%.
Range | Selected | |
Cost of equity | 6.6% - 8.7% | 7.65% |
Tax rate | 22.4% - 22.8% | 22.6% |
Cost of debt | 4.0% - 24.0% | 14% |
WACC | 5.5% - 11.6% | 8.6% |
Category | Low | High |
Long-term bond rate | 4.0% | 4.5% |
Equity market risk premium | 6.0% | 7.0% |
Adjusted beta | 0.43 | 0.52 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.6% | 8.7% |
Tax rate | 22.4% | 22.8% |
Debt/Equity ratio | 0.43 | 0.43 |
Cost of debt | 4.0% | 24.0% |
After-tax WACC | 5.5% | 11.6% |
Selected WACC | 8.6% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
BRBY.L | Burberry Group PLC | 0.43 | 2.21 | 1.66 |
ALDAR.PA | Damartex SA | 4.45 | 0.59 | 0.13 |
ALDEV.PA | Devernois SA | 2.54 | 0.23 | 0.08 |
BIJ.DE | Bijou Brigitte modische Accessoires AG | 0.43 | 0.24 | 0.18 |
BLT1T.TL | Baltika AS | 2.13 | 0.77 | 0.29 |
DERIM.IS | Derimod Konfeksiyon Ayakkabi Deri Sanayi ve Ticaret AS | 0.36 | 1.16 | 0.9 |
DUR.AT | Duros SA | 7.37 | -0.06 | -0.01 |
ELBE.AT | Elve SA | 0.02 | 0.28 | 0.27 |
MON.WA | Monnari Trade SA | 0.09 | 0.09 | 0.09 |
RDN.WA | Redan SA | 14.41 | 0.51 | 0.04 |
VAKKO.IS | Vakko Tekstil ve Hazir Giyim Sanayi Isletmeleri AS | 0.31 | 0.86 | 0.69 |
Low | High | |
Unlevered beta | 0.13 | 0.27 |
Relevered beta | 0.15 | 0.28 |
Adjusted relevered beta | 0.43 | 0.52 |
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 BRBY.L:
cost_of_equity (7.65%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.43) + 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.