NJR
New Jersey Resources Corp
Price:  
46.18 
USD
Volume:  
645,595.00
United States | Gas Utilities
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NJR WACC - Weighted Average Cost of Capital

The WACC of New Jersey Resources Corp (NJR) is 7.5%.

The Cost of Equity of New Jersey Resources Corp (NJR) is 7.30%.
The Cost of Debt of New Jersey Resources Corp (NJR) is 9.80%.

Range Selected
Cost of equity 6.30% - 8.30% 7.30%
Tax rate 18.20% - 20.70% 19.45%
Cost of debt 4.00% - 15.60% 9.80%
WACC 5.0% - 10.0% 7.5%
WACC

NJR WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.52 0.61
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.30% 8.30%
Tax rate 18.20% 20.70%
Debt/Equity ratio 0.71 0.71
Cost of debt 4.00% 15.60%
After-tax WACC 5.0% 10.0%
Selected WACC 7.5%

NJR'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 NJR:

cost_of_equity (7.30%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.52) + 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.