The WACC of PBF Energy Inc (PBF) is 4.9%.
| Range | Selected | |
| Cost of equity | 3.50% - 6.00% | 4.75% |
| Tax rate | 21.60% - 26.90% | 24.25% |
| Cost of debt | 7.00% - 7.10% | 7.05% |
| WACC | 4.0% - 5.7% | 4.9% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | -0.19 | 0.11 |
| Additional risk adjustments | 0.5% | 1.0% |
| Cost of equity | 3.50% | 6.00% |
| Tax rate | 21.60% | 26.90% |
| Debt/Equity ratio | 0.39 | 0.39 |
| Cost of debt | 7.00% | 7.10% |
| After-tax WACC | 4.0% | 5.7% |
| Selected WACC | 4.9% | |
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 PBF:
cost_of_equity (4.75%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (-0.19) + risk_adjustments (0.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.