The WACC of Laboratorios Farmaceuticos ROVI SA (ROVI.MC) is 8.4%.
Range | Selected | |
Cost of equity | 7.4% - 9.8% | 8.6% |
Tax rate | 20.0% - 22.7% | 21.35% |
Cost of debt | 4.0% - 4.5% | 4.25% |
WACC | 7.2% - 9.6% | 8.4% |
Category | Low | High |
Long-term bond rate | 3.1% | 3.6% |
Equity market risk premium | 7.4% | 8.4% |
Adjusted beta | 0.58 | 0.68 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 7.4% | 9.8% |
Tax rate | 20.0% | 22.7% |
Debt/Equity ratio | 0.04 | 0.04 |
Cost of debt | 4.0% | 4.5% |
After-tax WACC | 7.2% | 9.6% |
Selected WACC | 8.4% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
ROVI.MC | Laboratorios Farmaceuticos ROVI SA | 0.04 | 0.49 | 0.48 |
ALK B.CO | ALK-Abello A/S | 0.03 | 0.29 | 0.28 |
ALM.MC | Almirall SA | 0.18 | 0.63 | 0.56 |
DMP.DE | Dermapharm Holding SE | 0.57 | 0.57 | 0.4 |
FAE.MC | Faes Farma SA | 0.01 | 0.28 | 0.28 |
HCM.L | Hutchison China MediTech Ltd | 0.01 | 1.75 | 1.74 |
INDV.L | Indivior PLC | 0.19 | 0.9 | 0.78 |
KARO.ST | Karo Pharma AB | 0.35 | 0.15 | 0.11 |
TUB.BR | Financiere de Tubize SA | 0.01 | 1.7 | 1.69 |
VETO.PA | Vetoquinol SA | 0.02 | 0.31 | 0.3 |
Low | High | |
Unlevered beta | 0.36 | 0.51 |
Relevered beta | 0.37 | 0.52 |
Adjusted relevered beta | 0.58 | 0.68 |
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 ROVI.MC:
cost_of_equity (8.60%) = risk_free_rate (3.35%) + equity_risk_premium (7.90%) * adjusted_beta (0.58) + 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.