The WACC of Velocity Composites PLC (VEL.L) is 9.6%.
Range | Selected | |
Cost of equity | 8.9% - 11.3% | 10.1% |
Tax rate | 8.1% - 15.5% | 11.8% |
Cost of debt | 7.0% - 7.3% | 7.15% |
WACC | 8.6% - 10.6% | 9.6% |
Category | Low | High |
Long-term bond rate | 4.0% | 4.5% |
Equity market risk premium | 6.0% | 7.0% |
Adjusted beta | 0.82 | 0.91 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 8.9% | 11.3% |
Tax rate | 8.1% | 15.5% |
Debt/Equity ratio | 0.16 | 0.16 |
Cost of debt | 7.0% | 7.3% |
After-tax WACC | 8.6% | 10.6% |
Selected WACC | 9.6% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
VEL.L | Velocity Composites PLC | 0.16 | 1.06 | 0.93 |
AAC.ST | AAC Clyde Space AB | 0.04 | 0.29 | 0.28 |
ALDR.PA | Delta Drone SA | 5.19 | -1.52 | -0.27 |
ALNSE.PA | NSE SA | 0.05 | 0.68 | 0.65 |
CTT.ST | CTT Systems AB | 0.02 | 1.12 | 1.1 |
FACC.VI | FACC AG | 0.94 | 1.25 | 0.68 |
GOMX.ST | GomSpace Group AB | 0.04 | 0.23 | 0.22 |
LBW.WA | Lubawa SA | 0 | 0.64 | 0.63 |
M0Y.DE | Mynaric AG | 0.06 | 1.23 | 1.17 |
MSI.L | MS International PLC | 0 | 0.87 | 0.86 |
Low | High | |
Unlevered beta | 0.65 | 0.76 |
Relevered beta | 0.73 | 0.87 |
Adjusted relevered beta | 0.82 | 0.91 |
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 VEL.L:
cost_of_equity (10.10%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.82) + 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.