The WACC of Clabo SpA (CLA.MI) is 5.5%.
| Range | Selected | |
| Cost of equity | 9.40% - 12.20% | 10.80% |
| Tax rate | 30.50% - 35.00% | 32.75% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 5.2% - 5.8% | 5.5% |
| Category | Low | High |
| Long-term bond rate | 4.3% | 4.8% |
| Equity market risk premium | 8.8% | 9.8% |
| Adjusted beta | 0.58 | 0.7 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.40% | 12.20% |
| Tax rate | 30.50% | 35.00% |
| Debt/Equity ratio | 2.53 | 2.53 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 5.2% | 5.8% |
| Selected WACC | 5.5% | |
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 CLA.MI:
cost_of_equity (10.80%) = risk_free_rate (4.55%) + equity_risk_premium (9.30%) * adjusted_beta (0.58) + 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.