The WACC of Geox SpA (GEO.MI) is 8.4%.
| Range | Selected | |
| Cost of equity | 19.50% - 25.20% | 22.35% |
| Tax rate | 11.70% - 14.00% | 12.85% |
| Cost of debt | 4.00% - 4.50% | 4.25% |
| WACC | 7.6% - 9.3% | 8.4% |
| Category | Low | High |
| Long-term bond rate | 3.7% | 4.2% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 1.91 | 2.21 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 19.50% | 25.20% |
| Tax rate | 11.70% | 14.00% |
| Debt/Equity ratio | 2.95 | 2.95 |
| Cost of debt | 4.00% | 4.50% |
| After-tax WACC | 7.6% | 9.3% |
| Selected WACC | 8.4% | |
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 (22.35%) = risk_free_rate (3.95%) + equity_risk_premium (8.80%) * adjusted_beta (1.91) + 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.