SRX.TO WACC - Weighted Average Cost of Capital
The WACC of Storm Resources Ltd (SRX.TO) is 7.5%.
| Range | Selected | |
| Cost of equity | 6.6% - 9.7% | 8.15% |
| Tax rate | 5.9% - 18.0% | 11.95% |
| Cost of debt | 4.2% - 5.0% | 4.6% |
| WACC | 6.2% - 8.8% | 7.5% |
| Category | Low | High |
| Long-term bond rate | 3.4% | 3.9% |
| Equity market risk premium | 4.7% | 5.7% |
| Adjusted beta | 0.7 | 0.93 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.6% | 9.7% |
| Tax rate | 5.9% | 18.0% |
| Debt/Equity ratio | 0.18 | 0.18 |
| Cost of debt | 4.2% | 5.0% |
| After-tax WACC | 6.2% | 8.8% |
| Selected WACC | 7.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| SRX.TO | Storm Resources Ltd | 0.18 | 1.44 | 1.24 |
| BATL | Battalion Oil Corp | 8.7 | 1.93 | 0.22 |
| CRBO | Carbon Energy Corp | 2.9 | -0.43 | -0.12 |
| ERINQ | Erin Energy Corp | 1251797.1 | -94.37 | 0 |
| KRP | Kimbell Royalty Partners LP | 0.17 | 0.73 | 0.63 |
| ORC.B.V | Orca Exploration Group Inc | 0.35 | 1.02 | 0.78 |
| PNE.TO | Pine Cliff Energy Ltd | 0.29 | 1.11 | 0.88 |
| PNRG | Primeenergy Resources Corp | 0.01 | 1.53 | 1.51 |
| REI | Ring Energy Inc | 2.37 | 1.04 | 0.33 |
| SNM.V | ShaMaran Petroleum Corp | 0.53 | 1.37 | 0.92 |
| Low | High | |
| Unlevered beta | 0.51 | 0.82 |
| Relevered beta | 0.55 | 0.9 |
| Adjusted relevered beta | 0.7 | 0.93 |
SRX.TO'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 SRX.TO:
cost_of_equity (8.15%) = risk_free_rate (3.65%) + equity_risk_premium (5.20%) * adjusted_beta (0.7) + 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.