SIT.MI WACC - Weighted Average Cost of Capital

The WACC of SIT SpA (SIT.MI) is 8.0%.

The Cost of Equity of SIT SpA (SIT.MI) is 30.90%.

The Cost of Debt of SIT SpA (SIT.MI) is 4.25%.

	Range	Selected
Cost of equity	24.70% - 37.10%	30.90%
Tax rate	17.30% - 20.50%	18.90%
Cost of debt	4.00% - 4.50%	4.25%
WACC	6.9% - 9.2%	8.0%

WACC

SIT.MI WACC calculation

Category	Low	High

Long-term bond rate	3.7%	4.2%
Equity market risk premium	8.3%	9.3%
Adjusted beta	2.54	3.48

Additional risk adjustments	0.0%	0.5%
Cost of equity	24.70%	37.10%

Tax rate	17.30%	20.50%
Debt/Equity ratio	4.97	4.97
Cost of debt	4.00%	4.50%

After-tax WACC	6.9%	9.2%


Selected WACC	8.0%

SIT.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 SIT.MI:

cost_of_equity (30.90%) = risk_free_rate (3.95%) + equity_risk_premium (8.80%) * adjusted_beta (2.54) + 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.