Data
Cost of Equity Estimation Inputs
The inputs to the cost of equity estimation are presented below. They stem from our long-term research, which we will continue in the future. These inputs are updated on a monthly basis and published by end of the following month.
The calculation of the cost of equity is based on the commonly used Capital Asset Pricing Model (CAPM):
CoE = rf + 𝛽 × ERP
where rf is the risk-free rate (yield of the local sovereign bonds with 10Y tenor),
𝛽 is the beta coefficient, and
ERP is the equity risk premium.
Equity Risk Premium
The equity risk premium is estimated based on the current stock prices and expected dividends or free cash flows of stocks as an implied equity risk premium. The estimate is based on the publicly traded companies residing in European countries with the credit rating between Aa1 to Baa3 and is calculated as a 3-month average.
To estimate the cost of equity, the equity risk premium should be complemented by an appropriate risk-free rate and beta coeffficient.
The methodology of the equity risk premium calculation is available here.
8.4% as of 30 April 2025
medium companies (market capitalisation below EUR 1,188 million)
5.6% as of 30 April 2025
large companies (market capitalisation from EUR 1,188 million)
The smallest company included in the calculation of the equity risk premium as of 30 April 2025 has a market capitalisation of EUR 7 million and the largest EUR 347,014 million.