GALP.LS WACC - Weighted Average Cost of Capital

The WACC of Galp Energia SGPS SA (GALP.LS) is 7.7%.

The Cost of Equity of Galp Energia SGPS SA (GALP.LS) is 9.50%.

The Cost of Debt of Galp Energia SGPS SA (GALP.LS) is 5.00%.

	Range	Selected
Cost of equity	8.10% - 10.90%	9.50%
Tax rate	45.70% - 47.20%	46.45%
Cost of debt	5.00% - 5.00%	5.00%
WACC	6.7% - 8.8%	7.7%

WACC

GALP.LS WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.9%	7.8%
Adjusted beta	0.76	0.89

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.10%	10.90%

Tax rate	45.70%	47.20%
Debt/Equity ratio	0.34	0.34
Cost of debt	5.00%	5.00%

After-tax WACC	6.7%	8.8%


Selected WACC	7.7%

GALP.LS'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 GALP.LS:

cost_of_equity (9.50%) = risk_free_rate (3.15%) + equity_risk_premium (7.35%) * adjusted_beta (0.76) + 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.