LGEN.L WACC - Weighted Average Cost of Capital
The WACC of Legal & General Group PLC (LGEN.L) is 8.3%.
| Range | Selected | |
| Cost of equity | 8.1% - 12.7% | 10.4% |
| Tax rate | 24.1% - 36.5% | 30.3% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 6.8% - 9.8% | 8.3% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.69 | 1.1 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.1% | 12.7% |
| Tax rate | 24.1% | 36.5% |
| Debt/Equity ratio | 0.43 | 0.43 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 6.8% | 9.8% |
| Selected WACC | 8.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| LGEN.L | Legal & General Group PLC | 0.43 | 1.22 | 0.92 |
| AGN.AS | Aegon NV | 0.5 | 1.25 | 0.91 |
| CASS.MI | Societa Cattolica di Assicurazione Sc | 0.42 | 1.18 | 0.9 |
| PHNX.L | Phoenix Group Holdings PLC | 0.57 | 1.21 | 0.85 |
| PRU.L | Prudential PLC | 0.15 | 1.58 | 1.43 |
| PST.MI | Poste Italiane SpA | 3.99 | 0.62 | 0.16 |
| SLHN.SW | Swiss Life Holding AG | 0.41 | 0.58 | 0.45 |
| STB.OL | Storebrand ASA | 1.34 | 0.68 | 0.34 |
| PRU | Prudential Financial Inc | 0.56 | 0.12 | 0.08 |
| SLF.TO | Sun Life Financial Inc | 0.4 | 0.1 | 0.08 |
| Low | High | |
| Unlevered beta | 0.4 | 0.87 |
| Relevered beta | 0.54 | 1.15 |
| Adjusted relevered beta | 0.69 | 1.1 |
LGEN.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 LGEN.L:
cost_of_equity (10.40%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.69) + 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.