Valuation Insights

Industry analysis tool to estimate the market value of companies

The industry analysis tool provides estimates on the cost of capital evolution, but also on the relative value for 10 sectors.

The return on each sector was estimated by determining the cost of equity (for the financial services sector) and the weighted average cost of capital – WACC (for the other analyzed sectors).

The relative value of each analyzed sector was estimated by quantifying the financial multiples, which are valuation indicators widely used for business valuation.

Conclusions and results of the Valuation Insights analysis, available for the third quarter of 2025:

Cost of capital: Expected returns have mostly increased over the past 12 months, while valuation multiples have remained relatively stable across the analyzed sectors.

While most sectors experienced fluctuating trends in the first three quarters of 2025, over the past year we observe that the majority of the analyzed industries continue to record an increase of the cost of capital.

From the perspective of evolutions compared to the same period last year, the largest increases in the cost of capital were recorded in the materials sector and the consumer staples sector (+1.6 p.p.), followed by the consumer discretionary sector (+1.4 p.p.). Notable increases were also seen in the energy sector, with a rise of 1.2 p.p., as well as in the information technology sector, with an increase of 1.1 p.p.

Considering the recent perspectives on the evolution of the economy, the cost of capital has shown an upward trend. Due to the volatilities generated by recent geopolitical tensions, investors have acted cautiously, leading to a decrease in confidence in the financial markets, manifested by the increase in yields demanded by them. The slowdown in private consumption growth over the past 12 months has also influenced the evolution of the cost of capital, particularly for companies in the consumer staples and consumer discretionary sectors, which have been directly affected by increased volatility in consumer purchasing power.

Over the past 12 months, the increase in the cost of capital for the observed sectors has been significantly influenced by the evolution of the risk-free rate, as well as by the beta indicator, which has shown an upward trend compared to the same period last year. The beta indicator reflects how much the price movements of a company's shares are influenced by the overall capital market. The observed changes in beta can be explained, among other factors, by a slight shift in the capital structure of the analyzed sample of companies. Thus, over the past year, companies have tended to rely more on equity financing.

Moreover, the recent volatility of metal prices (such as gold, silver) and oil had several effects on the evolution of the cost of capital, where the upward pressure was implied by the higher volatility or input-cost risk (e.g., energy costs). Nevertheless, the latest moves of the central banks – Fed rate cuts of 25 bps as of September and ECB rate cuts as of June – raised the expected returns of investors, reflected in the increase in the cost of capital.

The analysis is based on processed data generated by the S&P Capital IQ database and considers a sample of representative listed companies in Europe (including Romania), related to each sector analyzed, as they are classified by source.