The WACC of Gigaset AG (GGS.DE) is 7.9%.
| Range | Selected | |
| Cost of equity | 9.40% - 13.30% | 11.35% |
| Tax rate | 29.40% - 41.20% | 35.30% |
| Cost of debt | 6.90% - 10.10% | 8.50% |
| WACC | 6.8% - 9.1% | 7.9% |
| Category | Low | High |
| Long-term bond rate | 2.6% | 3.1% |
| Equity market risk premium | 5.5% | 6.5% |
| Adjusted beta | 1.24 | 1.5 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.40% | 13.30% |
| Tax rate | 29.40% | 41.20% |
| Debt/Equity ratio | 1.35 | 1.35 |
| Cost of debt | 6.90% | 10.10% |
| After-tax WACC | 6.8% | 9.1% |
| Selected WACC | 7.9% | |
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 GGS.DE:
cost_of_equity (11.35%) = risk_free_rate (2.85%) + equity_risk_premium (6.00%) * adjusted_beta (1.24) + 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.