The WACC of Caleffi SpA (CLF.MI) is 6.7%.
| Range | Selected | |
| Cost of equity | 9.00% - 12.70% | 10.85% |
| Tax rate | 22.00% - 23.90% | 22.95% |
| Cost of debt | 4.00% - 4.60% | 4.30% |
| WACC | 5.8% - 7.6% | 6.7% |
| Category | Low | High |
| Long-term bond rate | 3.7% | 4.2% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 0.65 | 0.86 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.00% | 12.70% |
| Tax rate | 22.00% | 23.90% |
| Debt/Equity ratio | 1.23 | 1.23 |
| Cost of debt | 4.00% | 4.60% |
| After-tax WACC | 5.8% | 7.6% |
| Selected WACC | 6.7% | |
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 CLF.MI:
cost_of_equity (10.85%) = risk_free_rate (3.95%) + equity_risk_premium (8.80%) * adjusted_beta (0.65) + 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.