PKDC WACC - Weighted Average Cost of Capital
The WACC of Parker Drilling Co (PKDC) is 8.2%.
| Range | Selected | |
| Cost of equity | 9.6% - 13.7% | 11.65% |
| Tax rate | 13.1% - 22.2% | 17.65% |
| Cost of debt | 5.9% - 6.1% | 6% |
| WACC | 7.3% - 9.1% | 8.2% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.25 | 1.58 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.6% | 13.7% |
| Tax rate | 13.1% | 22.2% |
| Debt/Equity ratio | 1.07 | 1.07 |
| Cost of debt | 5.9% | 6.1% |
| After-tax WACC | 7.3% | 9.1% |
| Selected WACC | 8.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| PKDC | Parker Drilling Co | 1.07 | 0.5 | 0.27 |
| ESI.TO | Ensign Energy Services Inc | 2.54 | 1.7 | 0.54 |
| KEGX | Key Energy Services Inc | 20.5 | -0.25 | -0.01 |
| PD.TO | Precision Drilling Corp | 0.94 | 1.49 | 0.84 |
| PHX.TO | PHX Energy Services Corp | 0.14 | 1.57 | 1.4 |
| PTEN | Patterson-UTI Energy Inc | 0.55 | 1.42 | 0.97 |
| STEP.TO | Step Energy Services Ltd | 0.25 | 1.77 | 1.46 |
| TDW | Tidewater Inc | 0.27 | 1.22 | 1 |
| VTDRF | Vantage Drilling International | 0.4 | 0.35 | 0.26 |
| WTTR | Select Energy Services Inc | 0.08 | 1.42 | 1.34 |
| Low | High | |
| Unlevered beta | 0.72 | 0.98 |
| Relevered beta | 1.37 | 1.87 |
| Adjusted relevered beta | 1.25 | 1.58 |
PKDC'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 PKDC:
cost_of_equity (11.65%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.25) + 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.