LGF.A WACC - Weighted Average Cost of Capital
The WACC of Lions Gate Entertainment Corp (LGF.A) is 12.0%.
| Range | Selected | |
| Cost of equity | 10.6% - 14.3% | 12.45% |
| Tax rate | 4.0% - 9.7% | 6.85% |
| Cost of debt | 4.9% - 20.9% | 12.9% |
| WACC | 6.7% - 17.3% | 12.0% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.47 | 1.68 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.6% | 14.3% |
| Tax rate | 4.0% | 9.7% |
| Debt/Equity ratio | 1.96 | 1.96 |
| Cost of debt | 4.9% | 20.9% |
| After-tax WACC | 6.7% | 17.3% |
| Selected WACC | 12.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| LGF.A | Lions Gate Entertainment Corp | 2.14 | 0.66 | 0.22 |
| CNK | Cinemark Holdings Inc | 0.67 | 0.68 | 0.41 |
| DIS | Walt Disney Co | 0.24 | 0.83 | 0.67 |
| LYV | Live Nation Entertainment Inc | 0.2 | 0.97 | 0.82 |
| MSGE | Madison Square Garden Entertainment Corp | 0.36 | 1.01 | 0.75 |
| MSGS | Madison Square Garden Sports Corp | 0.07 | 0.76 | 0.72 |
| NFLX | Netflix Inc | 0.03 | 1.32 | 1.28 |
| WMG | Warner Music Group Corp | 0.28 | 0.6 | 0.48 |
| WWE | World Wrestling Entertainment Inc | 0.05 | 0.61 | 0.58 |
| Low | High | |
| Unlevered beta | 0.6 | 0.71 |
| Relevered beta | 1.7 | 2.01 |
| Adjusted relevered beta | 1.47 | 1.68 |
LGF.A'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 LGF.A:
cost_of_equity (12.45%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.47) + 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.