LOV.AX
Lovisa Holdings Ltd
Price:  
25.47 
AUD
Volume:  
104,044.00
Australia | Specialty Retail
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LOV.AX WACC - Weighted Average Cost of Capital

The WACC of Lovisa Holdings Ltd (LOV.AX) is 9.2%.

The Cost of Equity of Lovisa Holdings Ltd (LOV.AX) is 9.80%.
The Cost of Debt of Lovisa Holdings Ltd (LOV.AX) is 5.50%.

Range Selected
Cost of equity 8.60% - 11.00% 9.80%
Tax rate 26.20% - 30.10% 28.15%
Cost of debt 4.00% - 7.00% 5.50%
WACC 8.0% - 10.4% 9.2%
WACC

LOV.AX WACC calculation

Category Low High
Long-term bond rate 4.0% 4.5%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.91 0.99
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.60% 11.00%
Tax rate 26.20% 30.10%
Debt/Equity ratio 0.13 0.13
Cost of debt 4.00% 7.00%
After-tax WACC 8.0% 10.4%
Selected WACC 9.2%

LOV.AX'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 LOV.AX:

cost_of_equity (9.80%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.91) + 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.