HEAD.L
Headlam Group PLC
Price:  
95.80 
GBP
Volume:  
35,271.00
United Kingdom | Distributors
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HEAD.L WACC - Weighted Average Cost of Capital

The WACC of Headlam Group PLC (HEAD.L) is 9.8%.

The Cost of Equity of Headlam Group PLC (HEAD.L) is 7.05%.
The Cost of Debt of Headlam Group PLC (HEAD.L) is 14.65%.

Range Selected
Cost of equity 6.30% - 7.80% 7.05%
Tax rate 19.30% - 20.40% 19.85%
Cost of debt 5.30% - 24.00% 14.65%
WACC 5.1% - 14.5% 9.8%
WACC

HEAD.L WACC calculation

Category Low High
Long-term bond rate 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.39 0.41
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.30% 7.80%
Tax rate 19.30% 20.40%
Debt/Equity ratio 1.44 1.44
Cost of debt 5.30% 24.00%
After-tax WACC 5.1% 14.5%
Selected WACC 9.8%

HEAD.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 HEAD.L:

cost_of_equity (7.05%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.39) + 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.