PUMP WACC - Weighted Average Cost of Capital
The WACC of ProPetro Holding Corp (PUMP) is 7.5%.
| Range | Selected | |
| Cost of equity | 6.7% - 9.2% | 7.95% |
| Tax rate | 20.7% - 22.9% | 21.8% |
| Cost of debt | 4.9% - 4.9% | 4.9% |
| WACC | 6.5% - 8.6% | 7.5% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.63 | 0.77 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.7% | 9.2% |
| Tax rate | 20.7% | 22.9% |
| Debt/Equity ratio | 0.11 | 0.11 |
| Cost of debt | 4.9% | 4.9% |
| After-tax WACC | 6.5% | 8.6% |
| Selected WACC | 7.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| PUMP | ProPetro Holding Corp | 0.11 | 1.47 | 1.35 |
| AROC | Archrock Inc | 0.53 | 1.33 | 0.94 |
| CELP | Cypress Environmental Partners LP | 2.54 | 1.06 | 0.35 |
| CFW.TO | Calfrac Well Services Ltd | 1.17 | 0.81 | 0.42 |
| HLX | Helix Energy Solutions Group Inc | 0.32 | 1.08 | 0.86 |
| RES | RPC Inc | 0 | 1.25 | 1.25 |
| SLCA | U.S. Silica Holdings Inc | 0.69 | 0.47 | 0.31 |
| TUSK | Mammoth Energy Services Inc | 0.09 | 0.45 | 0.42 |
| USAC | USA Compression Partners LP | 0.86 | 0.65 | 0.39 |
| WEII.V | Wolverine Energy and Infrastructure Inc | 21.41 | 0.69 | 0.04 |
| Low | High | |
| Unlevered beta | 0.41 | 0.6 |
| Relevered beta | 0.45 | 0.66 |
| Adjusted relevered beta | 0.63 | 0.77 |
PUMP'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 PUMP:
cost_of_equity (7.95%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.63) + 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.