CFG
Citizens Financial Group Inc
Price:  
41.37 
USD
Volume:  
4,759,568.00
United States | Banks
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Citizens WACC - Weighted Average Cost of Capital

The WACC of Citizens Financial Group Inc (CFG) is 7.5%.

The Cost of Equity of Citizens Financial Group Inc (CFG) is 9.95%.
The Cost of Debt of Citizens Financial Group Inc (CFG) is 5.00%.

Range Selected
Cost of equity 8.70% - 11.20% 9.95%
Tax rate 20.50% - 21.20% 20.85%
Cost of debt 5.00% - 5.00% 5.00%
WACC 6.7% - 8.2% 7.5%
WACC

Citizens WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.04 1.13
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.70% 11.20%
Tax rate 20.50% 21.20%
Debt/Equity ratio 0.7 0.7
Cost of debt 5.00% 5.00%
After-tax WACC 6.7% 8.2%
Selected WACC 7.5%

Citizens'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 Citizens:

cost_of_equity (9.95%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.04) + 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.