The WACC of PBF Energy Inc (PBF) is 4.5%.
| Range | Selected | |
| Cost of equity | 3.40% - 5.60% | 4.50% |
| Tax rate | 21.60% - 26.90% | 24.25% |
| Cost of debt | 5.10% - 7.10% | 6.10% |
| WACC | 3.6% - 5.5% | 4.5% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | -0.53 | -0.23 |
| Additional risk adjustments | 2.0% | 2.5% |
| Cost of equity | 3.40% | 5.60% |
| Tax rate | 21.60% | 26.90% |
| Debt/Equity ratio | 0.26 | 0.26 |
| Cost of debt | 5.10% | 7.10% |
| After-tax WACC | 3.6% | 5.5% |
| Selected WACC | 4.5% | |
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 (4.50%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (-0.53) + risk_adjustments (2.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.