ET
Energy Transfer LP
Price:  
17.79 
USD
Volume:  
16,557,274.00
United States | Oil, Gas & Consumable Fuels
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ET WACC - Weighted Average Cost of Capital

The WACC of Energy Transfer LP (ET) is 7.0%.

The Cost of Equity of Energy Transfer LP (ET) is 8.80%.
The Cost of Debt of Energy Transfer LP (ET) is 5.40%.

Range Selected
Cost of equity 7.60% - 10.00% 8.80%
Tax rate 4.60% - 6.30% 5.45%
Cost of debt 4.70% - 6.10% 5.40%
WACC 6.1% - 7.9% 7.0%
WACC

ET WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.81 0.91
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.60% 10.00%
Tax rate 4.60% 6.30%
Debt/Equity ratio 0.98 0.98
Cost of debt 4.70% 6.10%
After-tax WACC 6.1% 7.9%
Selected WACC 7.0%

ET'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 ET:

cost_of_equity (8.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.81) + 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.