SMWH.L WACC - Weighted Average Cost of Capital
The WACC of WH Smith PLC (SMWH.L) is 7.9%.
| Range | Selected | |
| Cost of equity | 9.6% - 12.8% | 11.2% |
| Tax rate | 18.3% - 22.9% | 20.6% |
| Cost of debt | 4.0% - 5.2% | 4.6% |
| WACC | 6.8% - 8.9% | 7.9% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.94 | 1.12 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.6% | 12.8% |
| Tax rate | 18.3% | 22.9% |
| Debt/Equity ratio | 0.8 | 0.8 |
| Cost of debt | 4.0% | 5.2% |
| After-tax WACC | 6.8% | 8.9% |
| Selected WACC | 7.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| SMWH.L | WH Smith PLC | 0.8 | 1.51 | 0.92 |
| CARD.L | Card Factory PLC | 0.54 | 0.89 | 0.62 |
| FIE.DE | Fielmann AG | 0.12 | 0.88 | 0.8 |
| MATAS.CO | Matas A/S | 0.61 | 0.3 | 0.2 |
| MUSTI.HE | Musti Group Oyj | 0.27 | 0.17 | 0.14 |
| PETS.L | Pets at Home Group PLC | 0.36 | 1.26 | 0.98 |
| VALN.SW | Valora Holding AG | 1.21 | 1.15 | 0.58 |
| WOSG.L | Watches of Switzerland Group PLC | 0.61 | 1.94 | 1.31 |
| WRKS.L | Works co uk PLC | 4.09 | 0.29 | 0.07 |
| XXL.OL | XXL ASA | 3.84 | 2.09 | 0.51 |
| Low | High | |
| Unlevered beta | 0.56 | 0.7 |
| Relevered beta | 0.91 | 1.18 |
| Adjusted relevered beta | 0.94 | 1.12 |
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 (11.20%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.94) + 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.