LDO.MI WACC - Weighted Average Cost of Capital

The WACC of Leonardo SpA (LDO.MI) is 11.3%.

The Cost of Equity of Leonardo SpA (LDO.MI) is 12.50%.

The Cost of Debt of Leonardo SpA (LDO.MI) is 4.25%.

	Range	Selected
Cost of equity	11.40% - 13.60%	12.50%
Tax rate	11.50% - 17.40%	14.45%
Cost of debt	4.00% - 4.50%	4.25%
WACC	10.3% - 12.3%	11.3%

WACC

LDO.MI WACC calculation

Category	Low	High

Long-term bond rate	3.7%	4.2%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.93	0.97

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.40%	13.60%

Tax rate	11.50%	17.40%
Debt/Equity ratio	0.16	0.16
Cost of debt	4.00%	4.50%

After-tax WACC	10.3%	12.3%


Selected WACC	11.3%

LDO.MI'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 LDO.MI:

cost_of_equity (12.50%) = risk_free_rate (3.95%) + equity_risk_premium (8.80%) * adjusted_beta (0.93) + 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.