CPSS WACC - Weighted Average Cost of Capital
The WACC of Consumer Portfolio Services Inc (CPSS) is 11.0%.
| Range | Selected | |
| Cost of equity | 15.2% - 19.4% | 17.3% |
| Tax rate | 25.9% - 26.7% | 26.3% |
| Cost of debt | 5.0% - 23.9% | 14.45% |
| WACC | 4.3% - 17.6% | 11.0% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 2.47 | 2.59 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 15.2% | 19.4% |
| Tax rate | 25.9% | 26.7% |
| Debt/Equity ratio | 16.5 | 16.5 |
| Cost of debt | 5.0% | 23.9% |
| After-tax WACC | 4.3% | 17.6% |
| Selected WACC | 11.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| CPSS | Consumer Portfolio Services Inc | 16.5 | 0.21 | 0.02 |
| AIHS | Senmiao Technology Ltd | 0.08 | 0.29 | 0.27 |
| AXIS.V | Axis Auto Finance Inc | 1.32 | 0.51 | 0.26 |
| EZPW | EZCORP Inc | 0.43 | 0.07 | 0.05 |
| HX | Xiaobai Maimai Inc | 0.18 | 1.4 | 1.24 |
| LC | LendingClub Corp | 7.46 | 1.66 | 0.25 |
| MFIN | Medallion Financial Corp | 1.33 | 0.51 | 0.26 |
| MIT.V | Mint Corp | 0.05 | 1.9 | 1.84 |
| RFC.V | Rifco Inc | 6.08 | 1.21 | 0.22 |
| RM | Regional Management Corp | 5.14 | 1.08 | 0.23 |
| Low | High | |
| Unlevered beta | 0.24 | 0.26 |
| Relevered beta | 3.19 | 3.37 |
| Adjusted relevered beta | 2.47 | 2.59 |
CPSS'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 CPSS:
cost_of_equity (17.30%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (2.47) + 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.