The WACC of Petrofac Ltd (PFC.L) is 7.9%.
Range | Selected | |
Cost of equity | 45.8% - 74.5% | 60.15% |
Tax rate | 3.3% - 7.0% | 5.15% |
Cost of debt | 6.3% - 7.0% | 6.65% |
WACC | 7.3% - 8.5% | 7.9% |
Category | Low | High |
Long-term bond rate | 4.0% | 4.5% |
Equity market risk premium | 6.0% | 7.0% |
Adjusted beta | 6.99 | 9.96 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 45.8% | 74.5% |
Tax rate | 3.3% | 7.0% |
Debt/Equity ratio | 32.95 | 32.95 |
Cost of debt | 6.3% | 7.0% |
After-tax WACC | 7.3% | 8.5% |
Selected WACC | 7.9% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
PFC.L | Petrofac Ltd | 32.95 | 2.23 | 0.07 |
AKSO.OL | Aker Solutions ASA | 0.2 | 1.09 | 0.92 |
CGG.PA | CGG SA | 3.43 | 0.75 | 0.18 |
MGN.OL | Magnora ASA | 0 | 0.52 | 0.52 |
PRS.OL | Prosafe SE | 28.12 | 1.76 | 0.06 |
SBMO.AS | SBM Offshore NV | 1.93 | 0.91 | 0.32 |
SIOFF.OL | Siem Offshore Inc | 0.77 | 0.65 | 0.38 |
TRE.MC | Tecnicas Reunidas SA | 0.57 | 1.5 | 0.97 |
VK.PA | Vallourec SA | 0.33 | 0.9 | 0.69 |
FI | Fiserv Inc | 0.26 | 0.36 | 0.29 |
SRJ.AX | SRJ Technologies Group PLC | 0.18 | -1.13 | -0.97 |
Low | High | |
Unlevered beta | 0.29 | 0.38 |
Relevered beta | 9.94 | 14.37 |
Adjusted relevered beta | 6.99 | 9.96 |
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 PFC.L:
cost_of_equity (60.15%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (6.99) + 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.