SWX
Southwest Gas Holdings Inc
Price:  
72.75 
USD
Volume:  
230,435.00
United States | Gas Utilities
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SWX WACC - Weighted Average Cost of Capital

The WACC of Southwest Gas Holdings Inc (SWX) is 6.0%.

The Cost of Equity of Southwest Gas Holdings Inc (SWX) is 7.50%.
The Cost of Debt of Southwest Gas Holdings Inc (SWX) is 5.65%.

Range Selected
Cost of equity 6.50% - 8.50% 7.50%
Tax rate 19.10% - 21.40% 20.25%
Cost of debt 4.30% - 7.00% 5.65%
WACC 5.0% - 7.0% 6.0%
WACC

SWX WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.56 0.65
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.50% 8.50%
Tax rate 19.10% 21.40%
Debt/Equity ratio 0.98 0.98
Cost of debt 4.30% 7.00%
After-tax WACC 5.0% 7.0%
Selected WACC 6.0%

SWX'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 SWX:

cost_of_equity (7.50%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.56) + 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.