The WACC of Redcentric PLC (RCN.L) is 7.5%.
Range | Selected | |
Cost of equity | 6.8% - 9.0% | 7.9% |
Tax rate | 23.4% - 25.5% | 24.45% |
Cost of debt | 7.8% - 9.2% | 8.5% |
WACC | 6.5% - 8.4% | 7.5% |
Category | Low | High |
Long-term bond rate | 4.0% | 4.5% |
Equity market risk premium | 6.0% | 7.0% |
Adjusted beta | 0.47 | 0.57 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.8% | 9.0% |
Tax rate | 23.4% | 25.5% |
Debt/Equity ratio | 0.38 | 0.38 |
Cost of debt | 7.8% | 9.2% |
After-tax WACC | 6.5% | 8.4% |
Selected WACC | 7.5% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
RCN.L | Redcentric PLC | 0.38 | 0.09 | 0.07 |
ALC.MC | Altia Consultores SA | 0.06 | 0.17 | 0.16 |
CTAC.AS | Ctac NV | 0.19 | 0.02 | 0.02 |
DIGIA.HE | Digia Oyj | 0.14 | 0.5 | 0.45 |
NBA.LS | Novabase SGPS SA | 0.1 | 0.27 | 0.25 |
OBS.DE | Orbis AG | 0.15 | 0.02 | 0.02 |
ORIGO.IC | Origo hf | 0.26 | 1.03 | 0.86 |
PREV B.ST | Prevas AB | 0.29 | 0.39 | 0.32 |
SIILI.HE | Siili Solutions Oyj | 0.26 | 1.07 | 0.9 |
SOF B.ST | Softronic AB | 0.02 | 0.16 | 0.15 |
Low | High | |
Unlevered beta | 0.16 | 0.28 |
Relevered beta | 0.21 | 0.36 |
Adjusted relevered beta | 0.47 | 0.57 |
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 RCN.L:
cost_of_equity (7.90%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.47) + 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.