The WACC of Enel SpA (ENEL.MI) is 9.3%.
Range | Selected | |
Cost of equity | 9.5% - 12.5% | 11% |
Tax rate | 32.5% - 35.2% | 33.85% |
Cost of debt | 6.9% - 15.4% | 11.15% |
WACC | 7.2% - 11.3% | 9.3% |
Category | Low | High |
Long-term bond rate | 3.7% | 4.2% |
Equity market risk premium | 8.3% | 9.3% |
Adjusted beta | 0.7 | 0.84 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 9.5% | 12.5% |
Tax rate | 32.5% | 35.2% |
Debt/Equity ratio | 0.88 | 0.88 |
Cost of debt | 6.9% | 15.4% |
After-tax WACC | 7.2% | 11.3% |
Selected WACC | 9.3% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
ENEL.MI | Enel SpA | 0.88 | 0.5 | 0.32 |
CEZ.PR | CEZ as | 0.38 | 0.81 | 0.64 |
EBK.DE | EnBW Energie Baden Wuerttemberg AG | 1.08 | 0.19 | 0.11 |
EDF.PA | Electricite de France SA | 1.92 | 0.17 | 0.08 |
EDP.LS | EDP Energias de Portugal SA | 1.46 | 1.26 | 0.64 |
ELE.MC | Endesa SA | 0.38 | 0.46 | 0.37 |
FORTUM.HE | Fortum Oyj | 0.35 | 1.06 | 0.86 |
ORSTED.CO | Orsted A/S | 0.82 | 0.23 | 0.15 |
PGE.WA | PGE Polska Grupa Energetyczna SA | 0.5 | 0.62 | 0.47 |
SSE.L | SSE PLC | 0.52 | 0.67 | 0.5 |
Low | High | |
Unlevered beta | 0.35 | 0.48 |
Relevered beta | 0.55 | 0.76 |
Adjusted relevered beta | 0.7 | 0.84 |
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 ENEL.MI:
cost_of_equity (11.00%) = risk_free_rate (3.95%) + equity_risk_premium (8.80%) * adjusted_beta (0.7) + 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.