# Sector WACC Reference

Adapted from Dexter's sector WACC guidance. Use these ranges as starting
points, then adjust for the specific company.

## WACC by Sector

| Sector | Typical WACC Range | Notes |
|---|---:|---|
| Communication Services | 8-10% | Mix of stable telecom and growth media |
| Consumer Discretionary | 8-10% | Cyclical demand exposure |
| Consumer Staples | 7-8% | Defensive, stable demand |
| Energy | 9-11% | Commodity price exposure |
| Financials | 8-10% | Leverage is part of the business model |
| Health Care | 8-10% | Regulatory and pipeline risk |
| Industrials | 8-9% | Moderate cyclicality |
| Information Technology | 8-12% | Higher range for high-growth or less durable margins |
| Materials | 8-10% | Cyclical and commodity exposure |
| Real Estate | 7-9% | Interest rate sensitivity |
| Utilities | 6-7% | Regulated and stable cash flows |

## Adjustment Factors

Add to the base range:

- High debt or weak coverage: +1-2%
- Small cap or thin liquidity: +1-2%
- Emerging markets exposure: +1-3%
- Concentrated customer or supplier base: +0.5-1%
- Regulatory uncertainty: +0.5-1.5%

Subtract from the base range:

- Market leader with durable moat: -0.5-1%
- Recurring revenue or subscription model: -0.5-1%
- Investment grade balance sheet: -0.5%

## Reasonableness Checks

- WACC should usually be below ROIC for value-creating companies.
- If WACC exceeds ROIC, explicitly discuss value destruction risk.
- Compare the final WACC to sector peers when reliable data is available.
