The WACC of S&T AG (SANT.DE) is 7.0%.
| Range | Selected | |
| Cost of equity | 7.00% - 9.70% | 8.35% |
| Tax rate | 9.90% - 11.60% | 10.75% |
| Cost of debt | 4.00% - 4.50% | 4.25% |
| WACC | 6.0% - 8.0% | 7.0% |
| Category | Low | High |
| Long-term bond rate | 2.0% | 2.5% |
| Equity market risk premium | 4.7% | 5.7% |
| Adjusted beta | 1.05 | 1.17 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.00% | 9.70% |
| Tax rate | 9.90% | 11.60% |
| Debt/Equity ratio | 0.42 | 0.42 |
| Cost of debt | 4.00% | 4.50% |
| After-tax WACC | 6.0% | 8.0% |
| Selected WACC | 7.0% | |
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 SANT.DE:
cost_of_equity (8.35%) = risk_free_rate (2.25%) + equity_risk_premium (5.20%) * adjusted_beta (1.05) + 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.