The WACC of Time Out Group PLC (TMO.L) is 5.8%.
| Range | Selected | |
| Cost of equity | 5.10% - 9.10% | 7.10% |
| Tax rate | 3.00% - 6.10% | 4.55% |
| Cost of debt | 4.00% - 7.00% | 5.50% |
| WACC | 4.2% - 7.3% | 5.8% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | -0.07 | 0.38 |
| Additional risk adjustments | 1.5% | 2.0% |
| Cost of equity | 5.10% | 9.10% |
| Tax rate | 3.00% | 6.10% |
| Debt/Equity ratio | 2.31 | 2.31 |
| Cost of debt | 4.00% | 7.00% |
| After-tax WACC | 4.2% | 7.3% |
| Selected WACC | 5.8% | |
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 TMO.L:
cost_of_equity (7.10%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (-0.07) + risk_adjustments (1.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.