The WACC of JD Sports Fashion PLC (JD.L) is 8.4%.
| Range | Selected | |
| Cost of equity | 10.30% - 13.70% | 12.00% |
| Tax rate | 27.70% - 29.50% | 28.60% |
| Cost of debt | 4.10% - 5.10% | 4.60% |
| WACC | 7.3% - 9.6% | 8.4% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 1.06 | 1.25 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.30% | 13.70% |
| Tax rate | 27.70% | 29.50% |
| Debt/Equity ratio | 0.7 | 0.7 |
| Cost of debt | 4.10% | 5.10% |
| After-tax WACC | 7.3% | 9.6% |
| Selected WACC | 8.4% | |
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 JD.L:
cost_of_equity (12.00%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (1.06) + 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.