OVV
Ovintiv Inc
Price:  
41.50 
USD
Volume:  
3,028,112.00
United States | Oil, Gas & Consumable Fuels
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Ovintiv WACC - Weighted Average Cost of Capital

The WACC of Ovintiv Inc (OVV) is 8.0%.

The Cost of Equity of Ovintiv Inc (OVV) is 9.35%.
The Cost of Debt of Ovintiv Inc (OVV) is 6.20%.

Range Selected
Cost of equity 8.20% - 10.50% 9.35%
Tax rate 11.10% - 15.30% 13.20%
Cost of debt 5.10% - 7.30% 6.20%
WACC 7.0% - 9.0% 8.0%
WACC

Ovintiv WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.95 1
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.20% 10.50%
Tax rate 11.10% 15.30%
Debt/Equity ratio 0.51 0.51
Cost of debt 5.10% 7.30%
After-tax WACC 7.0% 9.0%
Selected WACC 8.0%

Ovintiv'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 Ovintiv:

cost_of_equity (9.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.95) + 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.