SAVE.L WACC - Weighted Average Cost of Capital
The WACC of Savannah Energy PLC (SAVE.L) is 7.8%.
| Range | Selected | |
| Cost of equity | 15.1% - 29.1% | 22.1% |
| Tax rate | 19.0% - 19.0% | 19% |
| Cost of debt | 5.5% - 5.5% | 5.5% |
| WACC | 6.5% - 9.2% | 7.8% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 1.86 | 3.45 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 15.1% | 29.1% |
| Tax rate | 19.0% | 19.0% |
| Debt/Equity ratio | 4.2 | 4.2 |
| Cost of debt | 5.5% | 5.5% |
| After-tax WACC | 6.5% | 9.2% |
| Selected WACC | 7.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| SAVE.L | Savannah Energy PLC | 4.2 | 0.42 | 0.1 |
| CASP.L | Caspian Sunrise PLC | 0.08 | 0.51 | 0.48 |
| CHAR.L | Chariot Oil and Gas Ltd | 0.06 | 1.55 | 1.48 |
| I3E.L | I3 Energy PLC | 0.23 | 0.23 | 0.19 |
| JOG.L | Jersey Oil and Gas PLC | 0 | 1.68 | 1.68 |
| LFDE.PA | La Francaise de l Energie SA | 0.16 | 0.93 | 0.82 |
| PANR.L | Pantheon Resources PLC | 0.06 | 0.08 | 0.08 |
| PMG.L | Parkmead Group PLC | 0.08 | 1.51 | 1.42 |
| RKH.L | Rockhopper Exploration PLC | 0 | 1.69 | 1.69 |
| ZOE.L | Zoetic International PLC | 0.01 | 0.55 | 0.54 |
| Low | High | |
| Unlevered beta | 0.52 | 1.06 |
| Relevered beta | 2.28 | 4.66 |
| Adjusted relevered beta | 1.86 | 3.45 |
SAVE.L'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 SAVE.L:
cost_of_equity (22.10%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (1.86) + 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.