PLUG WACC - Weighted Average Cost of Capital
The WACC of Plug Power Inc (PLUG) is 7.9%.
| Range | Selected | |
| Cost of equity | 7.5% - 10.0% | 8.75% |
| Tax rate | 0.4% - 1.7% | 1.05% |
| Cost of debt | 6.2% - 7.0% | 6.6% |
| WACC | 7.0% - 8.8% | 7.9% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.78 | 0.92 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.5% | 10.0% |
| Tax rate | 0.4% | 1.7% |
| Debt/Equity ratio | 0.61 | 0.61 |
| Cost of debt | 6.2% | 7.0% |
| After-tax WACC | 7.0% | 8.8% |
| Selected WACC | 7.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| PLUG | Plug Power Inc | 0.61 | 0.83 | 0.51 |
| ARRY | Array Technologies Inc | 0.69 | 1.1 | 0.65 |
| BLDP.TO | Ballard Power Systems Inc | 0.05 | 1.01 | 0.96 |
| CBAT | CBAK Energy Technology Inc | 0.25 | 0.74 | 0.59 |
| FCEL | Fuelcell Energy Inc | 1.13 | 0.06 | 0.03 |
| GNRC | Generac Holdings Inc | 0.16 | 1.21 | 1.05 |
| OESX | Orion Energy Systems Inc | 0.49 | 0.62 | 0.42 |
| RUN | Sunrun Inc | 7.65 | 0.68 | 0.08 |
| SHLS | Shoals Technologies Group Inc | 0.18 | 0.49 | 0.42 |
| WATT | Energous Corp | 0.09 | 0.38 | 0.35 |
| Low | High | |
| Unlevered beta | 0.42 | 0.55 |
| Relevered beta | 0.67 | 0.88 |
| Adjusted relevered beta | 0.78 | 0.92 |
PLUG'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 PLUG:
cost_of_equity (8.75%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.78) + 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.