GDOT WACC - Weighted Average Cost of Capital
The WACC of Green Dot Corp (GDOT) is 4.3%.
| Range | Selected | |
| Cost of equity | 6.8% - 11.7% | 9.25% |
| Tax rate | 21.5% - 24.3% | 22.9% |
| Cost of debt | 4.0% - 5.3% | 4.65% |
| WACC | 3.6% - 5.0% | 4.3% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.63 | 1.23 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.8% | 11.7% |
| Tax rate | 21.5% | 24.3% |
| Debt/Equity ratio | 6.87 | 6.87 |
| Cost of debt | 4.0% | 5.3% |
| After-tax WACC | 3.6% | 5.0% |
| Selected WACC | 4.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| GDOT | Green Dot Corp | 6.87 | 0.6 | 0.1 |
| ATLC | Atlanticus Holdings Corp | 3.06 | 0.12 | 0.04 |
| ENVA | Enova International Inc | 1.27 | 1.33 | 0.68 |
| EZPW | EZCORP Inc | 0.44 | 0.02 | 0.02 |
| FCFS | FirstCash Inc | 0.29 | 0.03 | 0.03 |
| NAVI | Navient Corp | 34.02 | 1.02 | 0.04 |
| NNI | Nelnet Inc | 2.17 | 0.62 | 0.23 |
| RFC.V | Rifco Inc | 6.08 | 1.21 | 0.21 |
| RM | Regional Management Corp | 5.06 | 1.04 | 0.21 |
| TREE | LendingTree Inc | 0.94 | 0.97 | 0.57 |
| Low | High | |
| Unlevered beta | 0.07 | 0.21 |
| Relevered beta | 0.45 | 1.34 |
| Adjusted relevered beta | 0.63 | 1.23 |
GDOT'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 GDOT:
cost_of_equity (9.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.63) + 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.