PMT.TO WACC - Weighted Average Cost of Capital
The WACC of Perpetual Energy Inc (PMT.TO) is 6.9%.
| Range | Selected | |
| Cost of equity | 8.6% - 14.9% | 11.75% |
| Tax rate | 25.9% - 26.5% | 26.2% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.7% - 8.2% | 6.9% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 1.07 | 1.76 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.6% | 14.9% |
| Tax rate | 25.9% | 26.5% |
| Debt/Equity ratio | 1.48 | 1.48 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.7% | 8.2% |
| Selected WACC | 6.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| PMT.TO | Perpetual Energy Inc | 1.48 | 0.6 | 0.29 |
| ATU.V | Altura Energy Inc | 0.14 | 2.04 | 1.84 |
| AXL.V | Arrow Exploration Corp | 0 | 0.24 | 0.24 |
| CTA.V | Centaurus Energy Inc | 1.61 | 1.02 | 0.47 |
| HME.V | Hemisphere Energy Corp | 0.02 | 0.59 | 0.58 |
| HOCL.V | Highwood Oil Company Ltd | 0.07 | 0.93 | 0.88 |
| KUB.V | Cub Energy Inc | 0.33 | 1.53 | 1.23 |
| PRQ.TO | Petrus Resources Ltd | 0.35 | 0.38 | 0.3 |
| QEC.TO | Questerre Energy Corp (Canada) | 0 | 1.5 | 1.5 |
| TAO.V | TAG Oil Ltd | 0.02 | 2.05 | 2.03 |
| Low | High | |
| Unlevered beta | 0.53 | 1.02 |
| Relevered beta | 1.1 | 2.13 |
| Adjusted relevered beta | 1.07 | 1.76 |
PMT.TO'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 PMT.TO:
cost_of_equity (11.75%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.07) + 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.