JDW.L WACC - Weighted Average Cost of Capital

The WACC of J D Wetherspoon PLC (JDW.L) is 7.0%.

The Cost of Equity of J D Wetherspoon PLC (JDW.L) is 10.15%.

The Cost of Debt of J D Wetherspoon PLC (JDW.L) is 6.15%.

	Range	Selected
Cost of equity	9.00% - 11.30%	10.15%
Tax rate	15.30% - 22.40%	18.85%
Cost of debt	4.70% - 7.60%	6.15%
WACC	6.0% - 8.0%	7.0%

WACC

JDW.L WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.83	0.91

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.00%	11.30%

Tax rate	15.30%	22.40%
Debt/Equity ratio	1.54	1.54
Cost of debt	4.70%	7.60%

After-tax WACC	6.0%	8.0%


Selected WACC	7.0%

JDW.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 JDW.L:

cost_of_equity (10.15%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.83) + 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.