SN.L
Smith & Nephew PLC
Price:  
1,068.00 
GBP
Volume:  
1,434,308.00
United Kingdom | Health Care Equipment & Supplies
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SN.L WACC - Weighted Average Cost of Capital

The WACC of Smith & Nephew PLC (SN.L) is 8.1%.

The Cost of Equity of Smith & Nephew PLC (SN.L) is 9.25%.
The Cost of Debt of Smith & Nephew PLC (SN.L) is 4.60%.

Range Selected
Cost of equity 8.00% - 10.50% 9.25%
Tax rate 10.10% - 13.30% 11.70%
Cost of debt 4.00% - 5.20% 4.60%
WACC 7.0% - 9.2% 8.1%
WACC

SN.L WACC calculation

Category Low High
Long-term bond rate 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.66 0.79
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.00% 10.50%
Tax rate 10.10% 13.30%
Debt/Equity ratio 0.27 0.27
Cost of debt 4.00% 5.20%
After-tax WACC 7.0% 9.2%
Selected WACC 8.1%

SN.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 SN.L:

cost_of_equity (9.25%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.66) + 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.