GEL WACC - Weighted Average Cost of Capital

The WACC of Genesis Energy LP (GEL) is 12.0%.

The Cost of Equity of Genesis Energy LP (GEL) is 8.20%.

The Cost of Debt of Genesis Energy LP (GEL) is 13.50%.

	Range	Selected
Cost of equity	6.70% - 9.70%	8.20%
Tax rate	0.90% - 1.70%	1.30%
Cost of debt	6.10% - 20.90%	13.50%
WACC	6.2% - 17.7%	12.0%

WACC

GEL WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	0.61	0.86

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.70%	9.70%

Tax rate	0.90%	1.70%
Debt/Equity ratio	2.87	2.87
Cost of debt	6.10%	20.90%

After-tax WACC	6.2%	17.7%


Selected WACC	12.0%

GEL'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 GEL:

cost_of_equity (8.20%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.61) + 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.