SAF.PA WACC - Weighted Average Cost of Capital
The WACC of Safran SA (SAF.PA) is 8.6%.
| Range | Selected | |
| Cost of equity | 7.7% - 10.0% | 8.85% |
| Tax rate | 29.8% - 32.6% | 31.2% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 7.5% - 9.7% | 8.6% |
| Category | Low | High |
| Long-term bond rate | 3.0% | 3.5% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 0.81 | 0.88 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.7% | 10.0% |
| Tax rate | 29.8% | 32.6% |
| Debt/Equity ratio | 0.04 | 0.04 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 7.5% | 9.7% |
| Selected WACC | 8.6% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| SAF.PA | Safran SA | 0.04 | 1.17 | 1.14 |
| AM.PA | Dassault Aviation SA | 0.01 | 0.62 | 0.61 |
| ASELS.IS | Aselsan Elektronik Sanayi ve Ticaret AS | 0.11 | 0.77 | 0.71 |
| BA.L | BAE Systems PLC | 0.19 | 0.62 | 0.55 |
| HO.PA | Thales SA | 0.15 | 0.36 | 0.33 |
| KOG.OL | Kongsberg Gruppen ASA | 0.02 | 1.13 | 1.12 |
| LDO.MI | Leonardo SpA | 0.17 | 0.75 | 0.68 |
| MTX.DE | MTU Aero Engines AG | 0.14 | 0.97 | 0.89 |
| RR.L | Rolls-Royce Holdings PLC | 0.06 | 1.41 | 1.35 |
| SAAB B.ST | Saab AB | 0.03 | 0.75 | 0.73 |
| Low | High | |
| Unlevered beta | 0.7 | 0.8 |
| Relevered beta | 0.72 | 0.82 |
| Adjusted relevered beta | 0.81 | 0.88 |
SAF.PA'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 SAF.PA:
cost_of_equity (8.85%) = risk_free_rate (3.25%) + equity_risk_premium (6.30%) * adjusted_beta (0.81) + 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.