The WACC of Science in Sport PLC (SIS.L) is 8.4%.
| Range | Selected | |
| Cost of equity | 6.20% - 7.90% | 7.05% |
| Tax rate | 2.00% - 3.50% | 2.75% |
| Cost of debt | 7.00% - 28.30% | 17.65% |
| WACC | 6.3% - 10.5% | 8.4% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.37 | 0.41 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.20% | 7.90% |
| Tax rate | 2.00% | 3.50% |
| Debt/Equity ratio | 0.16 | 0.16 |
| Cost of debt | 7.00% | 28.30% |
| After-tax WACC | 6.3% | 10.5% |
| Selected WACC | 8.4% | |
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 SIS.L:
cost_of_equity (7.05%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * 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.