The WACC of Vertu Motors PLC (VTU.L) is 9.3%.
Range | Selected | |
Cost of equity | 11.5% - 15.4% | 13.45% |
Tax rate | 24.9% - 26.1% | 25.5% |
Cost of debt | 7.6% - 8.1% | 7.85% |
WACC | 8.4% - 10.3% | 9.3% |
Category | Low | High |
Long-term bond rate | 4.0% | 4.5% |
Equity market risk premium | 6.0% | 7.0% |
Adjusted beta | 1.26 | 1.49 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 11.5% | 15.4% |
Tax rate | 24.9% | 26.1% |
Debt/Equity ratio | 1.2 | 1.2 |
Cost of debt | 7.6% | 8.1% |
After-tax WACC | 8.4% | 10.3% |
Selected WACC | 9.3% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
VTU.L | Vertu Motors PLC | 1.2 | 0.52 | 0.28 |
BILI A.ST | Bilia AB | 0.9 | 0.82 | 0.49 |
CAMB.L | Cambria Automobiles PLC | 0.13 | 1.22 | 1.11 |
DOAS.IS | Dogus Otomotiv Servis ve Ticaret AS | 0.44 | 1.62 | 1.22 |
HFD.L | Halfords Group PLC | 0.89 | 1.58 | 0.95 |
LOOK.L | Lookers PLC | 1.09 | -0.08 | -0.05 |
MMH.L | Marshall Motor Holdings PLC | 0.32 | 1.11 | 0.89 |
PDG.L | Pendragon PLC | 0.67 | -0.2 | -0.13 |
VVO.L | Vivo Energy PLC | 0.34 | 1.18 | 0.94 |
CWH | Camping World Holdings Inc | 1.5 | 1.89 | 0.89 |
Low | High | |
Unlevered beta | 0.73 | 0.91 |
Relevered beta | 1.39 | 1.73 |
Adjusted relevered beta | 1.26 | 1.49 |
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 VTU.L:
cost_of_equity (13.45%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (1.26) + 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.