GHH.L
Gooch & Housego PLC
Price:  
411.00 
GBP
Volume:  
53,423.00
United Kingdom | Electronic Equipment, Instruments & Components
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GHH.L WACC - Weighted Average Cost of Capital

The WACC of Gooch & Housego PLC (GHH.L) is 7.0%.

The Cost of Equity of Gooch & Housego PLC (GHH.L) is 7.95%.
The Cost of Debt of Gooch & Housego PLC (GHH.L) is 5.55%.

Range Selected
Cost of equity 6.70% - 9.20% 7.95%
Tax rate 20.90% - 24.30% 22.60%
Cost of debt 4.90% - 6.20% 5.55%
WACC 6.0% - 8.1% 7.0%
WACC

GHH.L WACC calculation

Category Low High
Long-term bond rate 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.45 0.6
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.70% 9.20%
Tax rate 20.90% 24.30%
Debt/Equity ratio 0.32 0.32
Cost of debt 4.90% 6.20%
After-tax WACC 6.0% 8.1%
Selected WACC 7.0%

GHH.L'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 GHH.L:

cost_of_equity (7.95%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.45) + 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.