SMWH.L WACC - Weighted Average Cost of Capital

The WACC of WH Smith PLC (SMWH.L) is 6.7%.

The Cost of Equity of WH Smith PLC (SMWH.L) is 11.05%.

The Cost of Debt of WH Smith PLC (SMWH.L) is 4.60%.

	Range	Selected
Cost of equity	9.80% - 12.30%	11.05%
Tax rate	26.60% - 35.20%	30.90%
Cost of debt	4.00% - 5.20%	4.60%
WACC	6.0% - 7.4%	6.7%

WACC

SMWH.L WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.97	1.05

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.80%	12.30%

Tax rate	26.60%	35.20%
Debt/Equity ratio	1.22	1.22
Cost of debt	4.00%	5.20%

After-tax WACC	6.0%	7.4%


Selected WACC	6.7%

SMWH.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 SMWH.L:

cost_of_equity (11.05%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.97) + 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.