LNG WACC - Weighted Average Cost of Capital

The WACC of Cheniere Energy Inc (LNG) is 7.3%.

The Cost of Equity of Cheniere Energy Inc (LNG) is 8.85%.

The Cost of Debt of Cheniere Energy Inc (LNG) is 4.55%.

	Range	Selected
Cost of equity	7.80% - 9.90%	8.85%
Tax rate	15.10% - 16.10%	15.60%
Cost of debt	4.00% - 5.10%	4.55%
WACC	6.4% - 8.1%	7.3%

WACC

LNG WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	0.85	0.89

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.80%	9.90%

Tax rate	15.10%	16.10%
Debt/Equity ratio	0.45	0.45
Cost of debt	4.00%	5.10%

After-tax WACC	6.4%	8.1%


Selected WACC	7.3%

LNG'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 LNG:

cost_of_equity (8.85%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.85) + 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.