CFBK WACC - Weighted Average Cost of Capital
The WACC of CF Bankshares Inc (CFBK) is 6.9%.
| Range | Selected | |
| Cost of equity | 6.1% - 9.5% | 7.8% |
| Tax rate | 18.9% - 19.2% | 19.05% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.6% - 8.2% | 6.9% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.49 | 0.83 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.1% | 9.5% |
| Tax rate | 18.9% | 19.2% |
| Debt/Equity ratio | 0.32 | 0.32 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.6% | 8.2% |
| Selected WACC | 6.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| CFBK | CF Bankshares Inc | 0.32 | 1.16 | 0.92 |
| CNF | CNFinance Holdings Ltd | 27.16 | 1.44 | 0.06 |
| GCBC | Greene County Bancorp Inc | 0.13 | 0.93 | 0.84 |
| GFED | Guaranty Federal Bancshares Inc | 0.22 | 0.6 | 0.51 |
| IROQ | IF Bancorp Inc | 0.51 | -0.03 | -0.02 |
| NECB | Northeast Community Bancorp Inc | 0 | 0.87 | 0.86 |
| RVSB | Riverview Bancorp Inc | 0.25 | 0.18 | 0.15 |
| STND | Standard AVB Financial Corp | 0.04 | 0.22 | 0.22 |
| SVBI | Severn Bancorp Inc | 0.12 | 0.79 | 0.73 |
| WBBW | Westbury Bancorp Inc | 0.05 | -0.03 | -0.02 |
| Low | High | |
| Unlevered beta | 0.19 | 0.6 |
| Relevered beta | 0.24 | 0.75 |
| Adjusted relevered beta | 0.49 | 0.83 |
CFBK'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 CFBK:
cost_of_equity (7.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.49) + 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.