ATO WACC - Weighted Average Cost of Capital

The WACC of Atmos Energy Corp (ATO) is 5.6%.

The Cost of Equity of Atmos Energy Corp (ATO) is 6.25%.

The Cost of Debt of Atmos Energy Corp (ATO) is 4.45%.

	Range	Selected
Cost of equity	5.50% - 7.00%	6.25%
Tax rate	13.90% - 16.90%	15.40%
Cost of debt	4.00% - 4.90%	4.45%
WACC	5.0% - 6.3%	5.6%

WACC

ATO WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	0.36	0.38

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.50%	7.00%

Tax rate	13.90%	16.90%
Debt/Equity ratio	0.34	0.34
Cost of debt	4.00%	4.90%

After-tax WACC	5.0%	6.3%


Selected WACC	5.6%

ATO's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for ATO:

cost_of_equity (6.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.36) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.