The WACC of Technogym SpA (TGYM.MI) is 10.7%.
| Range | Selected | |
| Cost of equity | 9.60% - 12.40% | 11.00% |
| Tax rate | 23.30% - 23.60% | 23.45% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 9.4% - 12.1% | 10.7% |
| Category | Low | High |
| Long-term bond rate | 3.7% | 4.2% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 0.72 | 0.83 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.60% | 12.40% |
| Tax rate | 23.30% | 23.60% |
| Debt/Equity ratio | 0.04 | 0.04 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 9.4% | 12.1% |
| Selected WACC | 10.7% | |
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 TGYM.MI:
cost_of_equity (11.00%) = risk_free_rate (3.95%) + equity_risk_premium (8.80%) * adjusted_beta (0.72) + 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.