SFL.MI WACC - Weighted Average Cost of Capital

The WACC of Safilo Group SpA (SFL.MI) is 8.7%.

The Cost of Equity of Safilo Group SpA (SFL.MI) is 10.15%.

The Cost of Debt of Safilo Group SpA (SFL.MI) is 4.45%.

	Range	Selected
Cost of equity	7.90% - 12.40%	10.15%
Tax rate	26.10% - 32.40%	29.25%
Cost of debt	4.00% - 4.90%	4.45%
WACC	6.8% - 10.6%	8.7%

WACC

SFL.MI WACC calculation

Category	Low	High

Long-term bond rate	3.7%	4.2%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.5	0.83

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.90%	12.40%

Tax rate	26.10%	32.40%
Debt/Equity ratio	0.26	0.26
Cost of debt	4.00%	4.90%

After-tax WACC	6.8%	10.6%


Selected WACC	8.7%

SFL.MI'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 SFL.MI:

cost_of_equity (10.15%) = risk_free_rate (3.95%) + equity_risk_premium (8.80%) * adjusted_beta (0.5) + 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.