PHIA.AS WACC - Weighted Average Cost of Capital
The WACC of Koninklijke Philips NV (PHIA.AS) is 7.3%.
| Range | Selected | |
| Cost of equity | 7.0% - 9.7% | 8.35% |
| Tax rate | 16.1% - 18.6% | 17.35% |
| Cost of debt | 4.0% - 7.0% | 5.5% |
| WACC | 6.0% - 8.6% | 7.3% |
| Category | Low | High |
| Long-term bond rate | 2.6% | 3.1% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.88 | 1.01 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.0% | 9.7% |
| Tax rate | 16.1% | 18.6% |
| Debt/Equity ratio | 0.37 | 0.37 |
| Cost of debt | 4.0% | 7.0% |
| After-tax WACC | 6.0% | 8.6% |
| Selected WACC | 7.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| PHIA.AS | Koninklijke Philips NV | 0.37 | 0.85 | 0.65 |
| BIM.PA | Biomerieux SA | 0.03 | 0.51 | 0.5 |
| GETI B.ST | Getinge AB | 0.22 | 0.68 | 0.58 |
| GN.CO | GN Store Nord A/S | 0.82 | 0.31 | 0.18 |
| OSSR.CO | Ossur hf | 0.25 | 0.22 | 0.18 |
| SHL.DE | Siemens Healthineers AG | 0.29 | 1.13 | 0.91 |
| SN.L | Smith & Nephew PLC | 0.26 | 1.06 | 0.87 |
| SOON.SW | Sonova Holding AG | 0.11 | 0.79 | 0.72 |
| SRT.DE | Sartorius AG | 0.33 | 1.45 | 1.14 |
| STMN.SW | Straumann Holding AG | 0.02 | 1.32 | 1.29 |
| Low | High | |
| Unlevered beta | 0.62 | 0.78 |
| Relevered beta | 0.82 | 1.01 |
| Adjusted relevered beta | 0.88 | 1.01 |
PHIA.AS'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 PHIA.AS:
cost_of_equity (8.35%) = risk_free_rate (2.85%) + equity_risk_premium (5.60%) * adjusted_beta (0.88) + 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.