The WACC of SFD SA (SFD.WA) is 8.3%.
| Range | Selected | |
| Cost of equity | 7.90% - 9.40% | 8.65% |
| Tax rate | 20.60% - 35.00% | 27.80% |
| Cost of debt | 7.20% - 8.80% | 8.00% |
| WACC | 7.6% - 9.0% | 8.3% |
| Category | Low | High |
| Long-term bond rate | 5.5% | 6.0% |
| Equity market risk premium | 6.3% | 7.3% |
| Adjusted beta | 0.37 | 0.4 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.90% | 9.40% |
| Tax rate | 20.60% | 35.00% |
| Debt/Equity ratio | 0.13 | 0.13 |
| Cost of debt | 7.20% | 8.80% |
| After-tax WACC | 7.6% | 9.0% |
| Selected WACC | 8.3% | |
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 SFD.WA:
cost_of_equity (8.65%) = risk_free_rate (5.75%) + equity_risk_premium (6.80%) * adjusted_beta (0.37) + 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.