VK.PA WACC - Weighted Average Cost of Capital

The WACC of Vallourec SA (VK.PA) is 7.7%.

The Cost of Equity of Vallourec SA (VK.PA) is 9.05%.

The Cost of Debt of Vallourec SA (VK.PA) is 5.00%.

	Range	Selected
Cost of equity	7.90% - 10.20%	9.05%
Tax rate	29.60% - 39.70%	34.65%
Cost of debt	4.00% - 6.00%	5.00%
WACC	6.7% - 8.7%	7.7%

WACC

VK.PA WACC calculation

Category	Low	High

Long-term bond rate	3.0%	3.5%
Equity market risk premium	5.8%	6.8%
Adjusted beta	0.84	0.91

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.90%	10.20%

Tax rate	29.60%	39.70%
Debt/Equity ratio	0.3	0.3
Cost of debt	4.00%	6.00%

After-tax WACC	6.7%	8.7%


Selected WACC	7.7%

VK.PA'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 VK.PA:

cost_of_equity (9.05%) = risk_free_rate (3.25%) + equity_risk_premium (6.30%) * adjusted_beta (0.84) + 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.