ETN
Eaton Corporation PLC
Price:  
309.87 
USD
Volume:  
2,038,657.00
Ireland | Electrical Equipment
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ETN WACC - Weighted Average Cost of Capital

The WACC of Eaton Corporation PLC (ETN) is 8.6%.

The Cost of Equity of Eaton Corporation PLC (ETN) is 9.00%.
The Cost of Debt of Eaton Corporation PLC (ETN) is 4.25%.

Range Selected
Cost of equity 7.50% - 10.50% 9.00%
Tax rate 16.40% - 17.70% 17.05%
Cost of debt 4.00% - 4.50% 4.25%
WACC 7.2% - 10.0% 8.6%
WACC

ETN WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.79 1.01
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.50% 10.50%
Tax rate 16.40% 17.70%
Debt/Equity ratio 0.08 0.08
Cost of debt 4.00% 4.50%
After-tax WACC 7.2% 10.0%
Selected WACC 8.6%

ETN'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 ETN:

cost_of_equity (9.00%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.79) + 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.