PSHG WACC - Weighted Average Cost of Capital
The WACC of Performance Shipping Inc (PSHG) is 5.8%.
| Range | Selected | |
| Cost of equity | 6.5% - 14.0% | 10.25% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 4.6% - 5.7% | 5.15% |
| WACC | 4.4% - 7.3% | 5.8% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.57 | 1.64 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.5% | 14.0% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 2.15 | 2.15 |
| Cost of debt | 4.6% | 5.7% |
| After-tax WACC | 4.4% | 7.3% |
| Selected WACC | 5.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| PSHG | Performance Shipping Inc | 2.15 | -0.22 | -0.09 |
| CKH | SEACOR Holdings Inc | 0.36 | 0.97 | 0.76 |
| CTRM | Castor Maritime Inc | 4.99 | 0.41 | 0.09 |
| EDRY | EuroDry Ltd | 3.93 | 0.63 | 0.16 |
| ESEA | Euroseas Ltd | 0.64 | 1.12 | 0.76 |
| FREEF | FreeSeas Inc | 15261.37 | 0.52 | 0 |
| GLBS | Globus Maritime Ltd | 3.57 | 0.39 | 0.11 |
| GNK | Genco Shipping & Trading Ltd | 0.15 | 1.16 | 1.04 |
| GOGL | Golden Ocean Group Ltd | 0.92 | 1.63 | 0.97 |
| NETI | Eneti Inc | 0.15 | 0.98 | 0.88 |
| Low | High | |
| Unlevered beta | 0.14 | 0.76 |
| Relevered beta | 0.36 | 1.96 |
| Adjusted relevered beta | 0.57 | 1.64 |
PSHG'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 PSHG:
cost_of_equity (10.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.57) + 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.