POGS WACC - Weighted Average Cost of Capital
The WACC of Pioneer Oil and Gas (POGS) is 4.7%.
| Range | Selected | |
| Cost of equity | 5.4% - 6.8% | 6.1% |
| Tax rate | 33.3% - 36.8% | 35.05% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 4.4% - 5.0% | 4.7% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.33 | 0.35 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.4% | 6.8% |
| Tax rate | 33.3% | 36.8% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 4.4% | 5.0% |
| Selected WACC | 4.7% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| POGS | Pioneer Oil and Gas | 0.91 | 1.05 | 0.66 |
| AMAZ | Amazing Energy Oil and Gas Co | 621.81 | 1.07 | 0 |
| DBRM | Daybreak Oil and Gas Inc | 36.67 | 1.8 | 0.07 |
| GASE | Gase Energy Inc | 67.79 | -0.66 | -0.01 |
| MCS.V | McChip Resources Inc | 0.41 | 0.71 | 0.56 |
| STTX | Stratex Oil & Gas Holdings Inc | 45.2 | -0.91 | -0.03 |
| WCE.V | WesCan Energy Corp | 0.99 | 1.23 | 0.74 |
| WNWG | Wentworth Energy Inc | 254350.23 | 0 | 0 |
| Low | High | |
| Unlevered beta | 0 | 0.17 |
| Relevered beta | 0 | 0.03 |
| Adjusted relevered beta | 0.33 | 0.35 |
POGS'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 POGS:
cost_of_equity (6.10%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.33) + 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.