The WACC of Blue Dolphin Energy Co (BDCO) is 8.3%.
Range | Selected | |
Cost of equity | 5.3% - 6.9% | 6.1% |
Tax rate | 0.6% - 1.2% | 0.9% |
Cost of debt | 7.0% - 11.9% | 9.45% |
WACC | 6.4% - 10.3% | 8.3% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 0.31 | 0.37 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 5.3% | 6.9% |
Tax rate | 0.6% | 1.2% |
Debt/Equity ratio | 2.18 | 2.18 |
Cost of debt | 7.0% | 11.9% |
After-tax WACC | 6.4% | 10.3% |
Selected WACC | 8.3% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
BDCO | Blue Dolphin Energy Co | 2.18 | -0.62 | -0.2 |
AMTX | Aemetis Inc | 6.8 | 1.61 | 0.21 |
CRDE | Cardinal Ethanol LLC | 0.13 | 0.03 | 0.03 |
GERS | Greenshift Corp | 10.15 | 0.58 | 0.05 |
GFGY | Granite Falls Energy LLC | 0.36 | -0.07 | -0.05 |
GIII.V | Gen III Oil Corp | 0.12 | -0.07 | -0.06 |
GPRE | Green Plains Inc | 2.16 | 0.79 | 0.25 |
HEOL | Highwater Ethanol LLC | 0.01 | -0.03 | -0.03 |
PTOI | Plastic2Oil Inc | 14.07 | 0.1 | 0.01 |
VTNR | Vertex Energy Inc | 72.03 | 1.02 | 0.01 |
Low | High | |
Unlevered beta | -0.01 | 0.02 |
Relevered beta | -0.03 | 0.06 |
Adjusted relevered beta | 0.31 | 0.37 |
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 BDCO:
cost_of_equity (6.10%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.31) + 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.