PXD WACC - Weighted Average Cost of Capital
The WACC of Pioneer Natural Resources Co (PXD) is 8.1%.
| Range | Selected | |
| Cost of equity | 7.4% - 9.6% | 8.5% |
| Tax rate | 22.4% - 23.0% | 22.7% |
| Cost of debt | 4.0% - 4.5% | 4.25% |
| WACC | 7.1% - 9.1% | 8.1% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.78 | 0.84 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.4% | 9.6% |
| Tax rate | 22.4% | 23.0% |
| Debt/Equity ratio | 0.08 | 0.08 |
| Cost of debt | 4.0% | 4.5% |
| After-tax WACC | 7.1% | 9.1% |
| Selected WACC | 8.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| PXD | Pioneer Natural Resources Co | 0.08 | 0.34 | 0.32 |
| APA | APA Corp (US) | 1 | 1.07 | 0.6 |
| CNQ.TO | Canadian Natural Resources Ltd | 0.23 | 1.07 | 0.91 |
| DVN | Devon Energy Corp | 0.44 | 0.74 | 0.55 |
| EOG | EOG Resources Inc | 0.08 | 0.72 | 0.68 |
| EQT | EQT Corp | 0.28 | 1.13 | 0.93 |
| FANG | Diamondback Energy Inc | 0.32 | 0.96 | 0.77 |
| HES | Hess Corp | 0.21 | 0.74 | 0.64 |
| MRO | Marathon Oil Corp | 0.34 | 0.32 | 0.25 |
| OVV | Ovintiv Inc | 0.58 | 1.12 | 0.77 |
| Low | High | |
| Unlevered beta | 0.62 | 0.72 |
| Relevered beta | 0.67 | 0.76 |
| Adjusted relevered beta | 0.78 | 0.84 |
PXD'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 PXD:
cost_of_equity (8.50%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.78) + 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.