WTRG
Essential Utilities Inc
Price:  
40.60 
USD
Volume:  
1,021,962.00
United States | Water Utilities
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WTRG WACC - Weighted Average Cost of Capital

The WACC of Essential Utilities Inc (WTRG) is 5.9%.

The Cost of Equity of Essential Utilities Inc (WTRG) is 6.95%.
The Cost of Debt of Essential Utilities Inc (WTRG) is 4.55%.

Range Selected
Cost of equity 5.90% - 8.00% 6.95%
Tax rate 1.50% - 2.50% 2.00%
Cost of debt 4.00% - 5.10% 4.55%
WACC 5.1% - 6.7% 5.9%
WACC

WTRG WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.44 0.56
Additional risk adjustments 0.0% 0.5%
Cost of equity 5.90% 8.00%
Tax rate 1.50% 2.50%
Debt/Equity ratio 0.69 0.69
Cost of debt 4.00% 5.10%
After-tax WACC 5.1% 6.7%
Selected WACC 5.9%

WTRG'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 WTRG:

cost_of_equity (6.95%) = 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.