The WACC of EnQuest PLC (ENQ.L) is 9.4%.
| Range | Selected | |
| Cost of equity | 22.00% - 29.80% | 25.90% |
| Tax rate | 13.80% - 22.50% | 18.15% |
| Cost of debt | 5.70% - 6.20% | 5.95% |
| WACC | 8.6% - 10.2% | 9.4% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 3.01 | 3.56 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 22.00% | 29.80% |
| Tax rate | 13.80% | 22.50% |
| Debt/Equity ratio | 3.68 | 3.68 |
| Cost of debt | 5.70% | 6.20% |
| After-tax WACC | 8.6% | 10.2% |
| Selected WACC | 9.4% | |
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 ENQ.L:
cost_of_equity (25.90%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (3.01) + 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.