MTDR WACC - Weighted Average Cost of Capital

The WACC of Matador Resources Co (MTDR) is 8.7%.

The Cost of Equity of Matador Resources Co (MTDR) is 11.25%.

The Cost of Debt of Matador Resources Co (MTDR) is 5.50%.

	Range	Selected
Cost of equity	9.60% - 12.90%	11.25%
Tax rate	14.40% - 19.40%	16.90%
Cost of debt	4.60% - 6.40%	5.50%
WACC	7.5% - 10.0%	8.7%

WACC

MTDR WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	1.25	1.44

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.60%	12.90%

Tax rate	14.40%	19.40%
Debt/Equity ratio	0.61	0.61
Cost of debt	4.60%	6.40%

After-tax WACC	7.5%	10.0%


Selected WACC	8.7%

MTDR'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 MTDR:

cost_of_equity (11.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.25) + 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.