JCS WACC - Weighted Average Cost of Capital
The WACC of Communications Systems Inc (JCS) is 6.9%.
| Range | Selected | |
| Cost of equity | 5.1% - 8.9% | 7% |
| Tax rate | 0.2% - 3.7% | 1.95% |
| Cost of debt | 7.0% - 7.0% | 7% |
| WACC | 6.0% - 7.8% | 6.9% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 0.33 | 0.8 |
| Additional risk adjustments | 0.5% | 1.0% |
| Cost of equity | 5.1% | 8.9% |
| Tax rate | 0.2% | 3.7% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 7.0% | 7.0% |
| After-tax WACC | 6.0% | 7.8% |
| Selected WACC | 6.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| JCS | Communications Systems Inc | 1.08 | 0.68 | 0.33 |
| BKTI | BK Technologies Corp | 1 | 0.58 | 0.29 |
| CLRO | Clearone Inc | 1.11 | 0.32 | 0.15 |
| FBCE | Fibercore Inc | 12.19 | -13.4 | -1.02 |
| GNRD | General Datacomm Industries Inc | 64716.02 | 20.65 | 0 |
| MINM | Zoom Telephonics Inc | 1.01 | -0.55 | -0.27 |
| OCC | Optical Cable Corp | 0.45 | 1.2 | 0.83 |
| TKOI | Telkonet Inc | 0.9 | -2.85 | -1.5 |
| WSTL | Westell Technologies Inc | 1.05 | 0.34 | 0.17 |
| XCOMQ | Xtera Communications Inc | 745644.6 | -1.16 | 0 |
| Low | High | |
| Unlevered beta | 0 | 0.16 |
| Relevered beta | 0 | 0.7 |
| Adjusted relevered beta | 0.33 | 0.8 |
JCS'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 JCS:
cost_of_equity (7.00%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (0.33) + risk_adjustments (0.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.