The WACC of GEA Group AG (G1A.DE) is 8.8%.
| Range | Selected | |
| Cost of equity | 7.80% - 10.20% | 9.00% |
| Tax rate | 17.90% - 21.00% | 19.45% |
| Cost of debt | 4.00% - 4.50% | 4.25% |
| WACC | 7.7% - 10.0% | 8.8% |
| Category | Low | High |
| Long-term bond rate | 2.8% | 3.3% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.99 | 1.05 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.80% | 10.20% |
| Tax rate | 17.90% | 21.00% |
| Debt/Equity ratio | 0.03 | 0.03 |
| Cost of debt | 4.00% | 4.50% |
| After-tax WACC | 7.7% | 10.0% |
| Selected WACC | 8.8% | |
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 G1A.DE:
cost_of_equity (9.00%) = risk_free_rate (3.05%) + equity_risk_premium (5.60%) * adjusted_beta (0.99) + 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.