LEA
Lear Corp
Price:  
94.98 
USD
Volume:  
995,029.00
United States | Auto Components
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LEA WACC - Weighted Average Cost of Capital

The WACC of Lear Corp (LEA) is 7.3%.

The Cost of Equity of Lear Corp (LEA) is 9.50%.
The Cost of Debt of Lear Corp (LEA) is 4.40%.

Range Selected
Cost of equity 8.00% - 11.00% 9.50%
Tax rate 25.10% - 26.10% 25.60%
Cost of debt 4.00% - 4.80% 4.40%
WACC 6.2% - 8.4% 7.3%
WACC

LEA WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.89 1.1
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.00% 11.00%
Tax rate 25.10% 26.10%
Debt/Equity ratio 0.55 0.55
Cost of debt 4.00% 4.80%
After-tax WACC 6.2% 8.4%
Selected WACC 7.3%

LEA'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 LEA:

cost_of_equity (9.50%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.89) + 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.