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Buzzi Unicem SpA WACC %

:6.54% (As of Today)
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As of today (2022-08-17), Buzzi Unicem SpA's weighted average cost of capital is 6.54%. Buzzi Unicem SpA's ROIC % is 9.07% (calculated using TTM income statement data). Buzzi Unicem SpA generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.


Buzzi Unicem SpA WACC % Historical Data

The historical data trend for Buzzi Unicem SpA's WACC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Buzzi Unicem SpA Annual Data
Trend Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21
WACC %
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 6.89 7.23 6.12 0.70 0.93

Buzzi Unicem SpA Semi-Annual Data
Jun12 Dec12 Jun13 Dec13 Jun14 Dec14 Jun15 Dec15 Jun16 Dec16 Jun17 Dec17 Jun18 Dec18 Jun19 Dec19 Jun20 Dec20 Jun21 Dec21
WACC % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 6.12 - 0.70 - 0.93

Competitive Comparison

For the Building Materials subindustry, Buzzi Unicem SpA's WACC %, along with its competitors' market caps and WACC % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

   

Buzzi Unicem SpA WACC % Distribution

For the Building Materials industry and Basic Materials sector, Buzzi Unicem SpA's WACC % distribution charts can be found below:

* The bar in red indicates where Buzzi Unicem SpA's WACC % falls into.



Buzzi Unicem SpA WACC % Calculation

The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. The WACC is commonly referred to as the firm's cost of capital. Generally speaking, a company's assets are financed by debt and equity. WACC is the average of the costs of these sources of financing, each of which is weighted by its respective use in the given situation. By taking a weighted average, we can see how much interest the company has to pay for every dollar it finances.

WACC=E/(E + D)*Cost of Equity+D/(E + D)*Cost of Debt*(1 - Tax Rate)

1. Weights:
Generally speaking, a company's assets are financed by debt and equity. We need to calculate the weight of equity and the weight of debt.
The market value of equity (E) is also called "Market Cap". As of today, Buzzi Unicem SpA's market capitalization (E) is €3339.778 Mil.
The market value of debt is typically difficult to calculate, therefore, GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding the latest two-year average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together. As of Dec. 2021, Buzzi Unicem SpA's latest two-year average Short-Term Debt & Capital Lease Obligation was €129.4315 Mil and its latest two-year average Long-Term Debt & Capital Lease Obligation was €1137.3145 Mil. The total Book Value of Debt (D) is €1266.746 Mil.
a) weight of equity = E / (E + D) = 3339.778 / (3339.778 + 1266.746) = 0.725
b) weight of debt = D / (E + D) = 1266.746 / (3339.778 + 1266.746) = 0.275

2. Cost of Equity:
GuruFocus uses Capital Asset Pricing Model (CAPM) to calculate the required rate of return. The formula is:
Cost of Equity = Risk-Free Rate of Return + Beta of Asset * (Expected Return of the Market - Risk-Free Rate of Return)
a) GuruFocus uses 10-Year Treasury Constant Maturity Rate as the risk-free rate. It is updated daily. The current risk-free rate is 3.36000000%. Please go to Economic Indicators page for more information. Please note that we use the 10-Year Treasury Constant Maturity Rate of the country/region where the company is headquartered. If the data for that country/region is not available, then we will use the 10-Year Treasury Constant Maturity Rate of the United States as default.
b) Beta is the sensitivity of the expected excess asset returns to the expected excess market returns. Buzzi Unicem SpA's beta is 0.77.
c) (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.
Cost of Equity = 3.36000000% + 0.77 * 6% = 7.98%

3. Cost of Debt:
GuruFocus uses last fiscal year end Interest Expense divided by the latest two-year average debt to get the simplified cost of debt.
As of Dec. 2021, Buzzi Unicem SpA's interest expense (positive number) was €41.803 Mil. Its total Book Value of Debt (D) is €1266.746 Mil.
Cost of Debt = 41.803 / 1266.746 = 3.3%.

4. Multiply by one minus Average Tax Rate:
GuruFocus uses the latest two-year average tax rate to do the calculation. The calculated average tax rate is limited to between 0% and 100%. If the calculated average tax rate is higher than 100%, it is set to 100%. If the calculated average tax rate is less than 0%, it is set to 0%.
The latest Two-year Average Tax Rate is 17.295%.

Buzzi Unicem SpA's Weighted Average Cost Of Capital (WACC) for Today is calculated as:

WACC=E / (E + D)*Cost of Equity+D / (E + D)*Cost of Debt*(1 - Tax Rate)
=0.725*7.98%+0.275*3.3%*(1 - 17.295%)
=6.54%

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Buzzi Unicem SpA  (MIL:BZU) WACC % Explanation

Because it costs money to raise capital. A firm that generates higher ROIC % than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, Buzzi Unicem SpA's weighted average cost of capital is 6.54%. Buzzi Unicem SpA's ROIC % is 9.07% (calculated using TTM income statement data). Buzzi Unicem SpA generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.


Be Aware

1. GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding latest two-year average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together.

2. The WACC formula discussed above does not include Preferred Stock. Please adjust if preferred stock is considered.

3. (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.

4. GuruFocus uses last fiscal year end Interest Expense divided by the latest two-year average debt to get the simplified cost of debt.


Related Terms

Buzzi Unicem SpA Business Description

Buzzi Unicem SpA logo
Address
Via Luigi Buzzi, 6, Casale Monferrato, ITA, 15033
Buzzi Unicem SpA manufactures and sells cement, ready-mix concrete, and aggregates. The company operates in two segments by product: cement and concrete/aggregates. The cement segment generates the majority of revenue, sells cement and cement-related products to the construction and building industries. The concrete and aggregates segment sells concrete and aggregates from hundreds of firm-owned concrete batch plants and aggregate quarries. The vast majority of Buzzi Unicem's revenue comes from Europe and North America.

Buzzi Unicem SpA Headlines

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