The WACC of CGG SA (CGG.PA) is 8.0%.
| Range | Selected | |
| Cost of equity | 7.80% - 13.50% | 10.65% |
| Tax rate | 17.00% - 30.50% | 23.75% |
| Cost of debt | 7.30% - 12.10% | 9.70% |
| WACC | 6.4% - 9.5% | 8.0% |
| Category | Low | High |
| Long-term bond rate | 2.6% | 3.1% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 0.88 | 1.44 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.80% | 13.50% |
| Tax rate | 17.00% | 30.50% |
| Debt/Equity ratio | 3.43 | 3.43 |
| Cost of debt | 7.30% | 12.10% |
| After-tax WACC | 6.4% | 9.5% |
| Selected WACC | 8.0% | |
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 CGG.PA:
cost_of_equity (10.65%) = risk_free_rate (2.85%) + equity_risk_premium (6.30%) * adjusted_beta (0.88) + 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.