PSTG WACC - Weighted Average Cost of Capital
The WACC of Pure Storage Inc (PSTG) is 8.4%.
| Range | Selected | |
| Cost of equity | 6.9% - 10.0% | 8.45% |
| Tax rate | 16.8% - 23.3% | 20.05% |
| Cost of debt | 4.0% - 4.5% | 4.25% |
| WACC | 6.9% - 9.9% | 8.4% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.66 | 0.91 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.9% | 10.0% |
| Tax rate | 16.8% | 23.3% |
| Debt/Equity ratio | 0.01 | 0.01 |
| Cost of debt | 4.0% | 4.5% |
| After-tax WACC | 6.9% | 9.9% |
| Selected WACC | 8.4% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| PSTG | Pure Storage Inc | 0.01 | 2.12 | 2.11 |
| ALOT | AstroNova Inc | 0.7 | 0.65 | 0.42 |
| CRSR | Corsair Gaming Inc | 0.22 | 2.02 | 1.73 |
| IGOI | iGO Inc | 0.92 | 0.89 | 0.51 |
| KODK | Eastman Kodak Co | 1.07 | 1.94 | 1.05 |
| NNDM | Nano Dimension Ltd | 0.04 | 1.11 | 1.08 |
| OSS | One Stop Systems Inc | 0.02 | 1.79 | 1.76 |
| OTIVF | On Track Innovations Ltd | 1.95 | 0.81 | 0.32 |
| TACT | TransAct Technologies Inc | 0.08 | 0.48 | 0.45 |
| TTD.V | Tinkerine Studios Ltd | 0.37 | 0.97 | 0.75 |
| VIDE | Video Display Corp | 0.46 | -0.59 | -0.43 |
| Low | High | |
| Unlevered beta | 0.51 | 1.05 |
| Relevered beta | 0.49 | 0.87 |
| Adjusted relevered beta | 0.66 | 0.91 |
PSTG'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 PSTG:
cost_of_equity (8.45%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.66) + 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.