GEO
Geo Group Inc
Price:  
25.32 
USD
Volume:  
1,786,290.00
United States | Equity Real Estate Investment Trusts (REITs)
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GEO WACC - Weighted Average Cost of Capital

The WACC of Geo Group Inc (GEO) is 8.0%.

The Cost of Equity of Geo Group Inc (GEO) is 9.30%.
The Cost of Debt of Geo Group Inc (GEO) is 7.05%.

Range Selected
Cost of equity 8.00% - 10.60% 9.30%
Tax rate 25.10% - 26.30% 25.70%
Cost of debt 7.00% - 7.10% 7.05%
WACC 7.1% - 8.9% 8.0%
WACC

GEO WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.9 1.02
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.00% 10.60%
Tax rate 25.10% 26.30%
Debt/Equity ratio 0.48 0.48
Cost of debt 7.00% 7.10%
After-tax WACC 7.1% 8.9%
Selected WACC 8.0%

GEO'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 GEO:

cost_of_equity (9.30%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.9) + 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.