The WACC of Ontex Group NV (ONTEX.BR) is 6.2%.
| Range | Selected | |
| Cost of equity | 8.00% - 11.60% | 9.80% |
| Tax rate | 26.90% - 32.10% | 29.50% |
| Cost of debt | 4.00% - 6.00% | 5.00% |
| WACC | 5.1% - 7.3% | 6.2% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.86 | 1.11 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.00% | 11.60% |
| Tax rate | 26.90% | 32.10% |
| Debt/Equity ratio | 1.32 | 1.32 |
| Cost of debt | 4.00% | 6.00% |
| After-tax WACC | 5.1% | 7.3% |
| Selected WACC | 6.2% | |
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 ONTEX.BR:
cost_of_equity (9.80%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.86) + 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.