SMS.L WACC - Weighted Average Cost of Capital
The WACC of Smart Metering Systems PLC (SMS.L) is 7.3%.
| Range | Selected | |
| Cost of equity | 5.9% - 7.8% | 6.85% |
| Tax rate | 12.7% - 20.7% | 16.7% |
| Cost of debt | 5.1% - 30.6% | 17.85% |
| WACC | 5.8% - 8.7% | 7.3% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.32 | 0.41 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.9% | 7.8% |
| Tax rate | 12.7% | 20.7% |
| Debt/Equity ratio | 0.06 | 0.06 |
| Cost of debt | 5.1% | 30.6% |
| After-tax WACC | 5.8% | 8.7% |
| Selected WACC | 7.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| SMS.L | Smart Metering Systems PLC | 0.06 | 0.42 | 0.4 |
| CPP.L | CPPGroup PLC | 0.1 | -0.26 | -0.24 |
| CWC.DE | Cewe Stiftung & Co KGaA | 0.06 | 0.33 | 0.32 |
| GYG.L | GYG PLC | 1.1 | 1.78 | 0.93 |
| LAMM B.ST | Lammhults Design Group AB | 0.78 | 0.01 | 0.01 |
| MARAS.HE | Martela Corp | 6.63 | 0.14 | 0.02 |
| QFUEL.OL | Quantafuel AS | 0.11 | -0.04 | -0.04 |
| RST.L | Restore PLC | 0.66 | 0.37 | 0.24 |
| SPS.MC | Service Point Solutions SA | 0.25 | -0.57 | -0.47 |
| SSG.OL | Self Storage Group ASA | 0.42 | -0.4 | -0.29 |
| Low | High | |
| Unlevered beta | -0.01 | 0.11 |
| Relevered beta | -0.01 | 0.12 |
| Adjusted relevered beta | 0.32 | 0.41 |
SMS.L'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 SMS.L:
cost_of_equity (6.85%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.32) + 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.