The WACC of Engie Eps SA (EPS.PA) is 7.7%.
| Range | Selected | |
| Cost of equity | 6.40% - 9.70% | 8.05% |
| Tax rate | 0.70% - 2.50% | 1.60% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 6.2% - 9.2% | 7.7% |
| Category | Low | High |
| Long-term bond rate | 2.6% | 3.1% |
| Equity market risk premium | 5.2% | 6.2% |
| Adjusted beta | 0.72 | 0.97 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.40% | 9.70% |
| Tax rate | 0.70% | 2.50% |
| Debt/Equity ratio | 0.12 | 0.12 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 6.2% | 9.2% |
| Selected WACC | 7.7% | |
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 EPS.PA:
cost_of_equity (8.05%) = risk_free_rate (2.85%) + equity_risk_premium (5.70%) * adjusted_beta (0.72) + 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.