The WACC of Easyjet PLC (EZJ.L) is 7.5%.
Range | Selected | |
Cost of equity | 8.4% - 12.4% | 10.4% |
Tax rate | 18.1% - 21.2% | 19.65% |
Cost of debt | 4.6% - 5.2% | 4.9% |
WACC | 6.3% - 8.7% | 7.5% |
Category | Low | High |
Long-term bond rate | 4.0% | 4.5% |
Equity market risk premium | 6.0% | 7.0% |
Adjusted beta | 0.74 | 1.06 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 8.4% | 12.4% |
Tax rate | 18.1% | 21.2% |
Debt/Equity ratio | 0.82 | 0.82 |
Cost of debt | 4.6% | 5.2% |
After-tax WACC | 6.3% | 8.7% |
Selected WACC | 7.5% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
EZJ.L | Easyjet PLC | 0.82 | 1.08 | 0.65 |
AEGN.AT | Aegean Airlines SA | 1.23 | 1.4 | 0.7 |
AIR.L | Air Partner PLC | 0.09 | 1.04 | 0.97 |
ENT.WA | Enter Air SA | 1.56 | 0.42 | 0.18 |
FIA1S.HE | Finnair Plc | 3.01 | 1.52 | 0.44 |
GMAA.L | Gama Aviation PLC | 1.04 | -0.72 | -0.39 |
IAG.L | International Consolidated Airlines Group SA | 0.93 | 1.43 | 0.82 |
NAS.OL | Norwegian Air Shuttle ASA | 0.79 | -0.33 | -0.2 |
PGSUS.IS | Pegasus Hava Tasimaciligi AS | 2.14 | 1.82 | 0.66 |
WIZZ.L | Wizz Air Holdings PLC | 5.09 | 1.39 | 0.27 |
Low | High | |
Unlevered beta | 0.37 | 0.66 |
Relevered beta | 0.61 | 1.09 |
Adjusted relevered beta | 0.74 | 1.06 |
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 EZJ.L:
cost_of_equity (10.40%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.74) + 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.