SRLP WACC - Weighted Average Cost of Capital
The WACC of Sprague Resources LP (SRLP) is 5.9%.
| Range | Selected | |
| Cost of equity | 5.9% - 7.8% | 6.85% |
| Tax rate | 8.1% - 10.3% | 9.2% |
| Cost of debt | 4.7% - 7.0% | 5.85% |
| WACC | 4.9% - 6.8% | 5.9% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.44 | 0.52 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.9% | 7.8% |
| Tax rate | 8.1% | 10.3% |
| Debt/Equity ratio | 1.7 | 1.7 |
| Cost of debt | 4.7% | 7.0% |
| After-tax WACC | 4.9% | 6.8% |
| Selected WACC | 5.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| SRLP | Sprague Resources LP | 1.7 | 0.38 | 0.15 |
| AE | Adams Resources & Energy Inc | 0.49 | 0.13 | 0.09 |
| CAPL | Crossamerica Partners LP | 0.92 | 0.14 | 0.08 |
| CEQP | Crestwood Equity Partners LP | 1.14 | 0.89 | 0.44 |
| FLST | Fuelstream Inc | 924791.9 | 1.42 | 0 |
| GEI.TO | Gibson Energy Inc | 0.73 | 0.98 | 0.59 |
| KEY.TO | Keyera Corp | 0.39 | 0.74 | 0.54 |
| NGL | NGL Energy Partners LP | 7.1 | 0.34 | 0.05 |
| TNP | Tsakos Energy Navigation Ltd | 1.81 | -0.16 | -0.06 |
| TWM.TO | Tidewater Midstream and Infrastructure Ltd | 6.18 | -0.54 | -0.08 |
| Low | High | |
| Unlevered beta | 0.06 | 0.11 |
| Relevered beta | 0.16 | 0.28 |
| Adjusted relevered beta | 0.44 | 0.52 |
SRLP'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 SRLP:
cost_of_equity (6.85%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.44) + 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.