STEP.TO WACC - Weighted Average Cost of Capital

The WACC of Step Energy Services Ltd (STEP.TO) is 8.6%.

The Cost of Equity of Step Energy Services Ltd (STEP.TO) is 9.85%.

The Cost of Debt of Step Energy Services Ltd (STEP.TO) is 5.40%.

	Range	Selected
Cost of equity	8.20% - 11.50%	9.85%
Tax rate	20.00% - 23.00%	21.50%
Cost of debt	4.20% - 6.60%	5.40%
WACC	7.1% - 10.1%	8.6%

WACC

STEP.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.99	1.21

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.20%	11.50%

Tax rate	20.00%	23.00%
Debt/Equity ratio	0.3	0.3
Cost of debt	4.20%	6.60%

After-tax WACC	7.1%	10.1%


Selected WACC	8.6%

STEP.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 STEP.TO:

cost_of_equity (9.85%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.99) + 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.