SIT.MI WACC - Weighted Average Cost of Capital

The WACC of SIT SpA (SIT.MI) is 8.4%.

The Cost of Equity of SIT SpA (SIT.MI) is 28.30%.

The Cost of Debt of SIT SpA (SIT.MI) is 5.50%.

	Range	Selected
Cost of equity	23.50% - 33.10%	28.30%
Tax rate	22.10% - 27.00%	24.55%
Cost of debt	4.00% - 7.00%	5.50%
WACC	6.8% - 10.1%	8.4%

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	2.39	3.05

Additional risk adjustments	0.0%	0.5%
Cost of equity	23.50%	33.10%

Tax rate	22.10%	27.00%
Debt/Equity ratio	4.6	4.6
Cost of debt	4.00%	7.00%

After-tax WACC	6.8%	10.1%


Selected WACC	8.4%

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 (28.30%) = risk_free_rate (3.95%) + equity_risk_premium (8.80%) * adjusted_beta (2.39) + 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.