HSV.L
HomeServe PLC
Price:  
1,198.00 
GBP
Volume:  
243,592.00
United Kingdom | Commercial Services & Supplies
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HSV.L WACC - Weighted Average Cost of Capital

The WACC of HomeServe PLC (HSV.L) is 8.3%.

The Cost of Equity of HomeServe PLC (HSV.L) is 9.25%.
The Cost of Debt of HomeServe PLC (HSV.L) is 4.45%.

Range Selected
Cost of equity 7.70% - 10.80% 9.25%
Tax rate 22.90% - 23.50% 23.20%
Cost of debt 4.00% - 4.90% 4.45%
WACC 7.0% - 9.6% 8.3%
WACC

HSV.L WACC calculation

Category Low High
Long-term bond rate 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.63 0.83
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.70% 10.80%
Tax rate 22.90% 23.50%
Debt/Equity ratio 0.2 0.2
Cost of debt 4.00% 4.90%
After-tax WACC 7.0% 9.6%
Selected WACC 8.3%

HSV.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 HSV.L:

cost_of_equity (9.25%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.63) + 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.