PSTG
Pure Storage Inc
Price:  
47.84 
USD
Volume:  
1,857,316.00
United States | Technology Hardware, Storage & Peripherals
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PSTG WACC - Weighted Average Cost of Capital

The WACC of Pure Storage Inc (PSTG) is 8.5%.

The Cost of Equity of Pure Storage Inc (PSTG) is 8.50%.
The Cost of Debt of Pure Storage Inc (PSTG) is 4.25%.

Range Selected
Cost of equity 7.00% - 10.00% 8.50%
Tax rate 16.80% - 23.30% 20.05%
Cost of debt 4.00% - 4.50% 4.25%
WACC 7.0% - 9.9% 8.5%
WACC

PSTG WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.68 0.91
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.00% 10.00%
Tax rate 16.80% 23.30%
Debt/Equity ratio 0.01 0.01
Cost of debt 4.00% 4.50%
After-tax WACC 7.0% 9.9%
Selected WACC 8.5%

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 (8.50%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.68) + 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.