The WACC of Terna Rete Elettrica Nazionale SpA (TRN.MI) is 6.9%.
Range | Selected | |
Cost of equity | 8.6% - 11.4% | 10% |
Tax rate | 28.6% - 29.0% | 28.8% |
Cost of debt | 4.0% - 4.7% | 4.35% |
WACC | 6.0% - 7.8% | 6.9% |
Category | Low | High |
Long-term bond rate | 3.7% | 4.2% |
Equity market risk premium | 8.3% | 9.3% |
Adjusted beta | 0.59 | 0.72 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 8.6% | 11.4% |
Tax rate | 28.6% | 29.0% |
Debt/Equity ratio | 0.81 | 0.81 |
Cost of debt | 4.0% | 4.7% |
After-tax WACC | 6.0% | 7.8% |
Selected WACC | 6.9% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
TRN.MI | Terna Rete Elettrica Nazionale SpA | 0.81 | 0.21 | 0.14 |
ANA.MC | Acciona SA | 1.42 | 0.89 | 0.45 |
BKW.SW | BKW AG | 0.2 | 0.37 | 0.32 |
ELI.BR | Elia Group SA | 1.39 | 0.47 | 0.23 |
ENG.WA | Energa SA | 2.33 | 0.4 | 0.15 |
EVN.VI | EVN AG | 0.28 | 0.65 | 0.54 |
IBE.MC | Iberdrola SA | 0.57 | 0.37 | 0.26 |
IGN1L.VS | Ignitis Grupe AB | 1.24 | 1.43 | 0.76 |
REE.MC | Red Electrica Corporacion SA | 0.74 | 0.3 | 0.2 |
VER.VI | Verbund AG | 0.22 | 0.59 | 0.51 |
Low | High | |
Unlevered beta | 0.25 | 0.37 |
Relevered beta | 0.39 | 0.58 |
Adjusted relevered beta | 0.59 | 0.72 |
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 TRN.MI:
cost_of_equity (10.00%) = risk_free_rate (3.95%) + equity_risk_premium (8.80%) * adjusted_beta (0.59) + 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.