HILS.L WACC - Weighted Average Cost of Capital

The WACC of Hill & Smith Holdings PLC (HILS.L) is 9.0%.

The Cost of Equity of Hill & Smith Holdings PLC (HILS.L) is 9.50%.

The Cost of Debt of Hill & Smith Holdings PLC (HILS.L) is 5.15%.

	Range	Selected
Cost of equity	8.00% - 11.00%	9.50%
Tax rate	26.60% - 29.10%	27.85%
Cost of debt	4.70% - 5.60%	5.15%
WACC	7.6% - 10.4%	9.0%

WACC

HILS.L WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.68	0.86

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.00%	11.00%

Tax rate	26.60%	29.10%
Debt/Equity ratio	0.1	0.1
Cost of debt	4.70%	5.60%

After-tax WACC	7.6%	10.4%


Selected WACC	9.0%

HILS.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 HILS.L:

cost_of_equity (9.50%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.68) + 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.