PGS.OL WACC - Weighted Average Cost of Capital
The WACC of PGS ASA (PGS.OL) is 7.4%.
| Range | Selected | |
| Cost of equity | 8.0% - 10.5% | 9.25% |
| Tax rate | 22.0% - 22.0% | 22% |
| Cost of debt | 7.0% - 7.2% | 7.1% |
| WACC | 6.7% - 8.1% | 7.4% |
| Category | Low | High |
| Long-term bond rate | 3.3% | 3.8% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.92 | 1.01 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.0% | 10.5% |
| Tax rate | 22.0% | 22.0% |
| Debt/Equity ratio | 0.98 | 0.98 |
| Cost of debt | 7.0% | 7.2% |
| After-tax WACC | 6.7% | 8.1% |
| Selected WACC | 7.4% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| PGS.OL | PGS ASA | 0.98 | 2.35 | 1.33 |
| AKSO.OL | Aker Solutions ASA | 0.2 | 1.1 | 0.95 |
| AQUA.OL | Aqualisbraemar Loc ASA | 0.13 | 1.65 | 1.5 |
| BWO.OL | BW Offshore Ltd | 2.51 | 1.12 | 0.38 |
| FUR.AS | Fugro NV | 0.28 | 0.76 | 0.62 |
| OCY.OL | Ocean Yield ASA | 2.17 | 1.6 | 0.59 |
| PRS.OL | Prosafe SE | 31.05 | 1.62 | 0.06 |
| SBMO.AS | SBM Offshore NV | 1.86 | 0.89 | 0.36 |
| SBX.OL | SeaBird Exploration PLC | 0.24 | 0.67 | 0.56 |
| SIOFF.OL | Siem Offshore Inc | 0.77 | 0.65 | 0.41 |
| SOFF.OL | Solstad Offshore ASA | 1.29 | 1.1 | 0.55 |
| Low | High | |
| Unlevered beta | 0.55 | 0.59 |
| Relevered beta | 0.88 | 1.01 |
| Adjusted relevered beta | 0.92 | 1.01 |
PGS.OL'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 PGS.OL:
cost_of_equity (9.25%) = risk_free_rate (3.55%) + equity_risk_premium (5.60%) * adjusted_beta (0.92) + 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.