The WACC of ESI Group SA (ESI.PA) is 7.3%.
Range | Selected | |
Cost of equity | 6.2% - 8.8% | 7.5% |
Tax rate | 27.5% - 38.5% | 33% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 6.1% - 8.5% | 7.3% |
Category | Low | High |
Long-term bond rate | 3.0% | 3.5% |
Equity market risk premium | 5.8% | 6.8% |
Adjusted beta | 0.55 | 0.7 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.2% | 8.8% |
Tax rate | 27.5% | 38.5% |
Debt/Equity ratio | 0.05 | 0.05 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 6.1% | 8.5% |
Selected WACC | 7.3% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
ESI.PA | ESI Group SA | 0.05 | 0.84 | 0.81 |
ALFA.L | Alfa Financial Software Holdings PLC | 0.01 | 0.34 | 0.34 |
BAS1V.HE | Basware Oyj | 0.15 | 0.95 | 0.87 |
CLIQ.DE | CLIQ Digital AG | 0.1 | 0.17 | 0.16 |
FBEN.DE | Fyber NV | 0.33 | -0.13 | -0.11 |
GKS.DE | GK Software SE | 0.05 | 0.84 | 0.81 |
IDOX.L | Idox PLC | 0.08 | 0.31 | 0.3 |
LIN.PA | Linedata Services SA | 0.26 | 0.42 | 0.36 |
OSP2.DE | USU Software AG | 0.09 | 0.9 | 0.85 |
SJJ.DE | Serviceware SE | 0.03 | 0.23 | 0.22 |
Low | High | |
Unlevered beta | 0.32 | 0.54 |
Relevered beta | 0.33 | 0.55 |
Adjusted relevered beta | 0.55 | 0.7 |
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 ESI.PA:
cost_of_equity (7.50%) = risk_free_rate (3.25%) + equity_risk_premium (6.30%) * adjusted_beta (0.55) + 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.