HCI
Hci Group Inc
Price:  
146.76 
USD
Volume:  
69,150
United States | Insurance

HCI WACC - Weighted Average Cost of Capital

The WACC of Hci Group Inc (HCI) is 6.8%.

The Cost of Equity of Hci Group Inc (HCI) is 7.2%.
The Cost of Debt of Hci Group Inc (HCI) is 5%.

RangeSelected
Cost of equity6.1% - 8.3%7.2%
Tax rate24.8% - 25.7%25.25%
Cost of debt5.0% - 5.0%5%
WACC5.8% - 7.7%6.8%
WACC

HCI WACC calculation

CategoryLowHigh
Long-term bond rate3.9%4.4%
Equity market risk premium4.6%5.6%
Adjusted beta0.480.61
Additional risk adjustments0.0%0.5%
Cost of equity6.1%8.3%
Tax rate24.8%25.7%
Debt/Equity ratio
0.130.13
Cost of debt5.0%5.0%
After-tax WACC5.8%7.7%
Selected WACC6.8%

HCI'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 HCI:

cost_of_equity (7.20%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.48) + 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.