SBRY.L WACC - Weighted Average Cost of Capital

The WACC of J Sainsbury PLC (SBRY.L) is 7.0%.

The Cost of Equity of J Sainsbury PLC (SBRY.L) is 9.50%.

The Cost of Debt of J Sainsbury PLC (SBRY.L) is 6.00%.

	Range	Selected
Cost of equity	8.50% - 10.50%	9.50%
Tax rate	32.10% - 34.50%	33.30%
Cost of debt	4.90% - 7.10%	6.00%
WACC	6.1% - 7.8%	7.0%

WACC

SBRY.L WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.76	0.79

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.50%	10.50%

Tax rate	32.10%	34.50%
Debt/Equity ratio	0.86	0.86
Cost of debt	4.90%	7.10%

After-tax WACC	6.1%	7.8%


Selected WACC	7.0%

SBRY.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 SBRY.L:

cost_of_equity (9.50%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.76) + 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.