JMT.LS WACC - Weighted Average Cost of Capital

The WACC of Jeronimo Martins SGPS SA (JMT.LS) is 7.3%.

The Cost of Equity of Jeronimo Martins SGPS SA (JMT.LS) is 8.25%.

The Cost of Debt of Jeronimo Martins SGPS SA (JMT.LS) is 5.90%.

	Range	Selected
Cost of equity	7.20% - 9.30%	8.25%
Tax rate	25.00% - 25.60%	25.30%
Cost of debt	5.10% - 6.70%	5.90%
WACC	6.4% - 8.3%	7.3%

WACC

JMT.LS WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.9%	7.8%
Adjusted beta	0.63	0.69

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.20%	9.30%

Tax rate	25.00%	25.60%
Debt/Equity ratio	0.31	0.31
Cost of debt	5.10%	6.70%

After-tax WACC	6.4%	8.3%


Selected WACC	7.3%

JMT.LS'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 JMT.LS:

cost_of_equity (8.25%) = risk_free_rate (3.15%) + equity_risk_premium (7.35%) * 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.