POOL WACC - Weighted Average Cost of Capital

The WACC of Pool Corp (POOL) is 7.0%.

The Cost of Equity of Pool Corp (POOL) is 7.60%.

The Cost of Debt of Pool Corp (POOL) is 4.50%.

	Range	Selected
Cost of equity	6.60% - 8.60%	7.60%
Tax rate	23.70% - 23.90%	23.80%
Cost of debt	4.40% - 4.60%	4.50%
WACC	6.1% - 7.8%	7.0%

WACC

POOL WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	0.59	0.66

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.60%	8.60%

Tax rate	23.70%	23.90%
Debt/Equity ratio	0.16	0.16
Cost of debt	4.40%	4.60%

After-tax WACC	6.1%	7.8%


Selected WACC	7.0%

POOL'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 POOL:

cost_of_equity (7.60%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.59) + 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.