The WACC of Geox SpA (GEO.MI) is 8.1%.
| Range | Selected | |
| Cost of equity | 17.30% - 23.80% | 20.55% |
| Tax rate | 11.70% - 14.00% | 12.85% |
| Cost of debt | 4.00% - 4.50% | 4.25% |
| WACC | 7.1% - 9.1% | 8.1% |
| Category | Low | High |
| Long-term bond rate | 3.7% | 4.2% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 1.64 | 2.05 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 17.30% | 23.80% |
| Tax rate | 11.70% | 14.00% |
| Debt/Equity ratio | 2.8 | 2.8 |
| Cost of debt | 4.00% | 4.50% |
| After-tax WACC | 7.1% | 9.1% |
| Selected WACC | 8.1% | |
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 GEO.MI:
cost_of_equity (20.55%) = risk_free_rate (3.95%) + equity_risk_premium (8.80%) * adjusted_beta (1.64) + 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.