PSX
Phillips 66
Price:  
120.90 
USD
Volume:  
2,830,993.00
United States | Oil, Gas & Consumable Fuels
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PSX WACC - Weighted Average Cost of Capital

The WACC of Phillips 66 (PSX) is 7.5%.

The Cost of Equity of Phillips 66 (PSX) is 8.65%.
The Cost of Debt of Phillips 66 (PSX) is 5.85%.

Range Selected
Cost of equity 6.60% - 10.70% 8.65%
Tax rate 20.80% - 22.70% 21.75%
Cost of debt 4.20% - 7.50% 5.85%
WACC 5.7% - 9.3% 7.5%
WACC

PSX WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.6 1.03
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.60% 10.70%
Tax rate 20.80% 22.70%
Debt/Equity ratio 0.39 0.39
Cost of debt 4.20% 7.50%
After-tax WACC 5.7% 9.3%
Selected WACC 7.5%

PSX'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 PSX:

cost_of_equity (8.65%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.6) + 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.