GSHD WACC - Weighted Average Cost of Capital
The WACC of Goosehead Insurance Inc (GSHD) is 6.6%.
| Range | Selected | |
| Cost of equity | 5.6% - 7.6% | 6.6% |
| Tax rate | 8.4% - 21.5% | 14.95% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.6% - 7.5% | 6.6% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.39 | 0.49 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.6% | 7.6% |
| Tax rate | 8.4% | 21.5% |
| Debt/Equity ratio | 0.02 | 0.02 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.6% | 7.5% |
| Selected WACC | 6.6% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| GSHD | Goosehead Insurance Inc | 0.02 | 0.45 | 0.44 |
| BRP | BRP Group Inc | 0.34 | 0.95 | 0.73 |
| CUII | China United Insurance Service Inc | 6936.1 | -0.38 | 0 |
| EHTH | eHealth Inc | 0.52 | 0.31 | 0.21 |
| FANH | Fanhua Inc | 0.35 | -0.35 | -0.27 |
| FFG | FBL Financial Group Inc | 0.07 | 0.06 | 0.05 |
| GOCO | Gohealth Inc | 7.32 | 0.78 | 0.1 |
| HUIZ | Huize Holding Ltd | 0.35 | 0.37 | 0.29 |
| SLQT | SelectQuote Inc | 1.86 | 0.72 | 0.27 |
| RQIH.L | Randall & Quilter Investment Holdings Ltd | 1231.13 | -0.41 | 0 |
| Low | High | |
| Unlevered beta | 0.08 | 0.24 |
| Relevered beta | 0.09 | 0.24 |
| Adjusted relevered beta | 0.39 | 0.49 |
GSHD'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 GSHD:
cost_of_equity (6.60%) = 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.