The WACC of Blackstone Group Inc (BX) is 8.1%.
Range | Selected | |
Cost of equity | 6.9% - 9.8% | 8.35% |
Tax rate | 13.6% - 14.5% | 14.05% |
Cost of debt | 4.0% - 4.5% | 4.25% |
WACC | 6.7% - 9.4% | 8.1% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 0.67 | 0.88 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.9% | 9.8% |
Tax rate | 13.6% | 14.5% |
Debt/Equity ratio | 0.06 | 0.06 |
Cost of debt | 4.0% | 4.5% |
After-tax WACC | 6.7% | 9.4% |
Selected WACC | 8.1% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
BX | Blackstone Group Inc | 0.06 | 1.26 | 1.2 |
ARCC | Ares Capital Corp | 0.88 | 0.68 | 0.38 |
BK | Bank of New York Mellon Corp | 0.69 | 0.97 | 0.61 |
BLK | BlackRock Inc | 0.07 | 1.09 | 1.02 |
CIX.TO | CI Financial Corp | 0.96 | 0.58 | 0.32 |
KKR | KKR & Co Inc | 0.4 | 1.89 | 1.4 |
NTRS | Northern Trust Corp | 5.4 | 1.14 | 0.2 |
PSEC | Prospect Capital Corp | 1.62 | 0.47 | 0.2 |
STT | State Street Corp | 1.16 | 1.07 | 0.54 |
TROW | T. Rowe Price Group Inc | 0 | 1.12 | 1.12 |
Low | High | |
Unlevered beta | 0.48 | 0.77 |
Relevered beta | 0.51 | 0.82 |
Adjusted relevered beta | 0.67 | 0.88 |
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 Blackstone:
cost_of_equity (8.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.67) + 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.