NWN
Northwest Natural Holding Co
Price:  
41.28 
USD
Volume:  
140,393.00
United States | Gas Utilities
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NWN WACC - Weighted Average Cost of Capital

The WACC of Northwest Natural Holding Co (NWN) is 5.1%.

The Cost of Equity of Northwest Natural Holding Co (NWN) is 7.25%.
The Cost of Debt of Northwest Natural Holding Co (NWN) is 4.50%.

Range Selected
Cost of equity 6.30% - 8.20% 7.25%
Tax rate 25.50% - 25.70% 25.60%
Cost of debt 4.10% - 4.90% 4.50%
WACC 4.5% - 5.7% 5.1%
WACC

NWN 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 0.59
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.30% 8.20%
Tax rate 25.50% 25.70%
Debt/Equity ratio 1.17 1.17
Cost of debt 4.10% 4.90%
After-tax WACC 4.5% 5.7%
Selected WACC 5.1%

NWN'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 NWN:

cost_of_equity (7.25%) = 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.