JMAT.L WACC - Weighted Average Cost of Capital

The WACC of Johnson Matthey PLC (JMAT.L) is 9.2%.

The Cost of Equity of Johnson Matthey PLC (JMAT.L) is 10.85%.

The Cost of Debt of Johnson Matthey PLC (JMAT.L) is 7.75%.

	Range	Selected
Cost of equity	9.50% - 12.20%	10.85%
Tax rate	23.30% - 27.60%	25.45%
Cost of debt	7.10% - 8.40%	7.75%
WACC	8.2% - 10.2%	9.2%

WACC

JMAT.L WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.92	1.03

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.50%	12.20%

Tax rate	23.30%	27.60%
Debt/Equity ratio	0.49	0.49
Cost of debt	7.10%	8.40%

After-tax WACC	8.2%	10.2%


Selected WACC	9.2%

JMAT.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 JMAT.L:

cost_of_equity (10.85%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.92) + 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.