ECPG
Encore Capital Group Inc
Price:  
40.88 
USD
Volume:  
263,177.00
United States | Consumer Finance
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ECPG WACC - Weighted Average Cost of Capital

The WACC of Encore Capital Group Inc (ECPG) is 5.9%.

The Cost of Equity of Encore Capital Group Inc (ECPG) is 8.75%.
The Cost of Debt of Encore Capital Group Inc (ECPG) is 7.10%.

Range Selected
Cost of equity 7.30% - 10.20% 8.75%
Tax rate 22.70% - 29.90% 26.30%
Cost of debt 5.10% - 9.10% 7.10%
WACC 4.6% - 7.2% 5.9%
WACC

ECPG WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.76 0.96
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.30% 10.20%
Tax rate 22.70% 29.90%
Debt/Equity ratio 3.99 3.99
Cost of debt 5.10% 9.10%
After-tax WACC 4.6% 7.2%
Selected WACC 5.9%

ECPG'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 ECPG:

cost_of_equity (8.75%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.76) + 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.