Genworth WACC - Weighted Average Cost of Capital
The WACC of Genworth Financial Inc (GNW) is 7.0%.
| Range | Selected | |
| Cost of equity | 7.3% - 9.7% | 8.5% |
| Tax rate | 24.6% - 25.5% | 25.05% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 6.2% - 7.8% | 7.0% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.75 | 0.86 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.3% | 9.7% |
| Tax rate | 24.6% | 25.5% |
| Debt/Equity ratio | 0.46 | 0.46 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 6.2% | 7.8% |
| Selected WACC | 7.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| GNW | Genworth Financial Inc | 0.46 | 0.77 | 0.57 |
| AEL | American Equity Investment Life Holding Co | 0.19 | 0.56 | 0.49 |
| ATH | Athene Holding Ltd | 0.12 | 1.69 | 1.55 |
| BHF | Brighthouse Financial Inc | 1.03 | 0.27 | 0.15 |
| CNO | CNO Financial Group Inc | 1.19 | 0.78 | 0.41 |
| GL | Globe Life Inc | 0.27 | 0.51 | 0.43 |
| IAG.TO | iA Financial Corporation Inc | 0.15 | 1.3 | 1.17 |
| SFC.TO | Sagicor Financial Company Ltd | 1.17 | -0.2 | -0.11 |
| TRUP | Trupanion Inc | 0.06 | 1.18 | 1.13 |
| UNM | Unum Group | 0.26 | 0.72 | 0.6 |
| Low | High | |
| Unlevered beta | 0.47 | 0.58 |
| Relevered beta | 0.63 | 0.79 |
| Adjusted relevered beta | 0.75 | 0.86 |
Genworth'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 Genworth:
cost_of_equity (8.50%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.75) + 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.