LBYE WACC - Weighted Average Cost of Capital
The WACC of Liberty Energy Corp (LBYE) is 6.3%.
| Range | Selected | |
| Cost of equity | 8.5% - 73.4% | 40.95% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 7.0% - 7.0% | 7% |
| WACC | 5.3% - 7.3% | 6.3% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.01 | 12.24 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.5% | 73.4% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 30.03 | 30.03 |
| Cost of debt | 7.0% | 7.0% |
| After-tax WACC | 5.3% | 7.3% |
| Selected WACC | 6.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| LBYE | Liberty Energy Corp | 30.03 | 141.52 | 6.17 |
| BIR.TO | Birchcliff Energy Ltd | 0.38 | 1.29 | 1.01 |
| BTE.TO | Baytex Energy Corp | 1.31 | 2.09 | 1.07 |
| ESTE | Earthstone Energy Inc | 0.35 | 0.98 | 0.78 |
| RYPE | Royalite Petroleum Company Inc | 0 | 0 | 0 |
| Low | High | |
| Unlevered beta | 0.91 | 1.03 |
| Relevered beta | 1.01 | 17.78 |
| Adjusted relevered beta | 1.01 | 12.24 |
LBYE'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 LBYE:
cost_of_equity (40.95%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.01) + 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.