CPG.L
Compass Group PLC
Price:  
2,552.00 
GBP
Volume:  
2,558,926.00
United Kingdom | Hotels, Restaurants & Leisure
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CPG.L WACC - Weighted Average Cost of Capital

The WACC of Compass Group PLC (CPG.L) is 7.9%.

The Cost of Equity of Compass Group PLC (CPG.L) is 8.60%.
The Cost of Debt of Compass Group PLC (CPG.L) is 4.45%.

Range Selected
Cost of equity 7.60% - 9.60% 8.60%
Tax rate 24.30% - 27.20% 25.75%
Cost of debt 4.00% - 4.90% 4.45%
WACC 7.0% - 8.8% 7.9%
WACC

CPG.L WACC calculation

Category Low High
Long-term bond rate 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.6 0.65
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.60% 9.60%
Tax rate 24.30% 27.20%
Debt/Equity ratio 0.14 0.14
Cost of debt 4.00% 4.90%
After-tax WACC 7.0% 8.8%
Selected WACC 7.9%

CPG.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 CPG.L:

cost_of_equity (8.60%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.6) + 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.