GURUFOCUS.COM » STOCK LIST » Technology » Software » Sage Group (The) PLC (OTCPK:SGGEF) » Definitions » WACC %

SGGEF (Sage Group (The)) WACC % :11.33% (As of Dec. 14, 2024)


View and export this data going back to 2009. Start your Free Trial

What is Sage Group (The) WACC %?

As of today (2024-12-14), Sage Group (The)'s weighted average cost of capital is 11.33%%. Sage Group (The)'s ROIC % is 9.16% (calculated using TTM income statement data). Sage Group (The) earns returns that do not match up to its cost of capital. It will destroy value as it grows.

For a comprehensive WACC calculation, please access the WACC Calculator.


Sage Group (The) WACC % Historical Data

The historical data trend for Sage Group (The)'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.

Sage Group (The) WACC % Chart

Sage Group (The) Annual Data
Trend Sep15 Sep16 Sep17 Sep18 Sep19 Sep20 Sep21 Sep22 Sep23 Sep24
WACC %
Get a 7-Day Free Trial Premium Member Only Premium Member Only 4.40 6.35 8.54 6.31 6.17

Sage Group (The) Semi-Annual Data
Mar15 Sep15 Mar16 Sep16 Mar17 Sep17 Mar18 Sep18 Mar19 Sep19 Mar20 Sep20 Mar21 Sep21 Mar22 Sep22 Mar23 Sep23 Mar24 Sep24
WACC % Get a 7-Day Free Trial 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 8.54 8.59 6.31 7.51 6.17

Competitive Comparison of Sage Group (The)'s WACC %

For the Software - Application subindustry, Sage Group (The)'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.


Sage Group (The)'s WACC % Distribution in the Software Industry

For the Software industry and Technology sector, Sage Group (The)'s WACC % distribution charts can be found below:

* The bar in red indicates where Sage Group (The)'s WACC % falls into.



Sage Group (The) 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, Sage Group (The)'s market capitalization (E) is $16467.209 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 one-year semi-annual average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together. As of Sep. 2024, Sage Group (The)'s latest one-year semi-annual average Book Value of Debt (D) is $1601.1957 Mil.
a) weight of equity = E / (E + D) = 16467.209 / (16467.209 + 1601.1957) = 0.9114
b) weight of debt = D / (E + D) = 1601.1957 / (16467.209 + 1601.1957) = 0.0886

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 4.1993%. 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. Sage Group (The)'s beta is 1.33.
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 = 4.1993% + 1.33 * 6% = 12.1793%

3. Cost of Debt:
GuruFocus uses latest TTM Interest Expense divided by the latest one-year semi-annual average debt to get the simplified cost of debt.
As of Sep. 2024, Sage Group (The)'s interest expense (positive number) was $55.732 Mil. Its total Book Value of Debt (D) is $1601.1957 Mil.
Cost of Debt = 55.732 / 1601.1957 = 3.4806%.

4. Multiply by one minus TTM Tax Rate:
GuruFocus uses the most recent TTM Tax Expense divided by the most recent TTM Pre-Tax Income to calculate the tax rate. The calculated TTM tax rate is limited to between 0% and 100%. If the calculated tax rate is higher than 100%, it is set to 100%. If the calculated tax rate is less than 0%, it is set to 0%.
The latest calculated TTM Tax Rate = 133.794 / 552.916 = 24.2%.

Sage Group (The)'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)
=0.9114*12.1793%+0.0886*3.4806%*(1 - 24.2%)
=11.33%

* 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.


Sage Group (The)  (OTCPK:SGGEF) 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, Sage Group (The)'s weighted average cost of capital is 11.33%%. Sage Group (The)'s ROIC % is 9.16% (calculated using TTM income statement data). Sage Group (The) earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Be Aware

1. GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding latest one-year semi-annual average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together.
For companies that report quarterly, GuruFocus combines all of the most recent year's quarterly debt data from the beginning of the year to the year-end and calculates the average.
For companies that report semi-annually, GuruFocus combines all of the most recent year's semi-annual debt data from the start of the year to the year-end and calculates the average.
For companies that report annually, GuruFocus combines the beginning and ending annual debt data from the most recent year and then calculates the average.

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 the latest TTM Interest Expense divided by the latest one-year semi-annual average debt to get the simplified cost of debt.


Related Terms

Sage Group (The) Business Description

Traded in Other Exchanges
Address
C23 - 5 & 6 Cobalt Park Way, Cobalt Park, Newcastle upon Tyne, GBR, NE28 9EJ
The Sage Group is a U.K.-based provider of accounting and enterprise resource planning, or ERP, software, predominantly to customers in the U.S. and Europe. The company was founded in 1981 and historically sold on-premises software products with perpetual software licenses. However, the company is transitioning toward cloud connected and cloud native products, sold via software-as-a-service, or SaaS, contracts. Sage's main cloud native products include Sage Accounting, for small businesses, and Sage Intacct, which Sage acquired in 2017, for midsize businesses.

Sage Group (The) Headlines

From GuruFocus

Half Year 2019 Sage Group PLC Earnings Call Transcript

By GuruFocus Research 02-14-2024

Q3 2023 Sage Group PLC Trading Statement Call Transcript

By GuruFocus Research 02-14-2024

Half Year 2021 Sage Group PLC Earnings Call Transcript

By GuruFocus Research 02-14-2024

Full Year 2019 Sage Group PLC Earnings Call Transcript

By GuruFocus Research 02-14-2024

Q3 2020 Sage Group PLC Trading Statement Call Transcript

By GuruFocus Research 02-14-2024

Sage Group (The) PLC's Dividend Analysis

By GuruFocus Research 01-10-2024

Q1 2021 Sage Group PLC Trading Statement Call Transcript

By GuruFocus Research 02-14-2024

Q1 2024 Sage Group PLC Trading Statement Call Transcript

By GuruFocus Research 02-14-2024

Full Year 2020 Sage Group PLC Earnings Call Transcript

By GuruFocus Research 02-14-2024