The WACC of ENB Financial Corp (ENBP) is 6.0%.
Range | Selected | |
Cost of equity | 5.7% - 7.9% | 6.8% |
Tax rate | 15.4% - 16.0% | 15.7% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 5.3% - 6.8% | 6.0% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 0.39 | 0.54 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 5.7% | 7.9% |
Tax rate | 15.4% | 16.0% |
Debt/Equity ratio | 0.41 | 0.41 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 5.3% | 6.8% |
Selected WACC | 6.0% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
ENBP | ENB Financial Corp | 0.41 | 0.07 | 0.05 |
CIZN | Citizens Holding Co | 6.55 | 0.44 | 0.07 |
CWBC | Community West Bancshares | 0.17 | 0.85 | 0.74 |
EMYB | Embassy Bancorp Inc | 0.17 | 0.08 | 0.07 |
NWYF | Northway Financial Inc | 1.06 | 1.7 | 0.9 |
OPOF | Old Point Financial Corp | 0.16 | -0.44 | -0.39 |
PFLC | Pacific Financial Corp | 0.89 | 0.26 | 0.15 |
PTRS | Partners Bancorp | 0.35 | 0.3 | 0.23 |
QNBC | QNB Corp | 0.74 | -0.26 | -0.16 |
SAL | Salisbury Bancorp Inc | 0.22 | 0.34 | 0.29 |
Low | High | |
Unlevered beta | 0.07 | 0.18 |
Relevered beta | 0.09 | 0.31 |
Adjusted relevered beta | 0.39 | 0.54 |
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 ENBP:
cost_of_equity (6.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.39) + 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.