NEX WACC - Weighted Average Cost of Capital
The WACC of Nextier Oilfield Solutions Inc (NEX) is 9.9%.
| Range | Selected | |
| Cost of equity | 9.4% - 12.1% | 10.75% |
| Tax rate | 1.2% - 1.4% | 1.3% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 8.7% - 11.0% | 9.9% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.21 | 1.29 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.4% | 12.1% |
| Tax rate | 1.2% | 1.4% |
| Debt/Equity ratio | 0.17 | 0.17 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 8.7% | 11.0% |
| Selected WACC | 9.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| NEX | Nextier Oilfield Solutions Inc | 0.17 | 1.35 | 1.15 |
| AROC | Archrock Inc | 0.51 | 1.37 | 0.91 |
| LBRT | Liberty Oilfield Services Inc | 0.24 | 1.39 | 1.13 |
| PUMP | ProPetro Holding Corp | 0.14 | 1.51 | 1.33 |
| RES | RPC Inc | 0 | 1.32 | 1.32 |
| SCL.TO | Shawcor Ltd | 0.21 | 1.12 | 0.93 |
| SES.TO | Secure Energy Services Inc | 0.15 | 1.26 | 1.09 |
| SLCA | U.S. Silica Holdings Inc | 0.69 | 0.47 | 0.28 |
| STEP.TO | Step Energy Services Ltd | 0.3 | 1.76 | 1.35 |
| WTTR | Select Energy Services Inc | 0.09 | 1.51 | 1.39 |
| Low | High | |
| Unlevered beta | 1.11 | 1.22 |
| Relevered beta | 1.31 | 1.43 |
| Adjusted relevered beta | 1.21 | 1.29 |
NEX'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 NEX:
cost_of_equity (10.75%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.21) + 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.