The WACC of Les Hotels de Paris SA (HDP.PA) is 4.7%.
Range | Selected | |
Cost of equity | 3.1% - 10.2% | 6.65% |
Tax rate | 5.7% - 13.7% | 9.7% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 4.6% - 4.9% | 4.7% |
Category | Low | High |
Long-term bond rate | 3.0% | 3.5% |
Equity market risk premium | 5.8% | 6.8% |
Adjusted beta | -0.49 | 0.47 |
Additional risk adjustments | 3.0% | 3.5% |
Cost of equity | 3.1% | 10.2% |
Tax rate | 5.7% | 13.7% |
Debt/Equity ratio | 9.18 | 9.18 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 4.6% | 4.9% |
Selected WACC | 4.7% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
HDP.PA | Les Hotels de Paris SA | 9.18 | 0.01 | 0 |
ALLHB.PA | Les Hotels Baverez SA | 0.09 | -0.39 | -0.36 |
IGV.MI | I Grandi Viaggi SpA | 0.05 | 0.16 | 0.16 |
LAMPS.AT | Lampsa Hellenic Hotels SA | 0.14 | 0.13 | 0.11 |
MLHOT.PA | Hotelim SA | 0.21 | -1.17 | -0.98 |
NHH.MC | NH Hotel Group SA | 0.93 | -0.38 | -0.2 |
ODHN.SW | Orascom Development Holding AG | 1.48 | -0.36 | -0.15 |
PPH.L | PPHE Hotel Group Ltd | 1.79 | 0.14 | 0.05 |
SSTY.L | Safestay PLC | 3.04 | -0.43 | -0.11 |
WXF.VI | Warimpex Finanz und Beteiligungs AG | 4.53 | 0.75 | 0.14 |
Low | High | |
Unlevered beta | -0.13 | 0.02 |
Relevered beta | -1.22 | 0.21 |
Adjusted relevered beta | -0.49 | 0.47 |
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 HDP.PA:
cost_of_equity (6.65%) = risk_free_rate (3.25%) + equity_risk_premium (6.30%) * adjusted_beta (-0.49) + risk_adjustments (3.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.