JMP WACC - Weighted Average Cost of Capital
The WACC of JMP Group LLC (JMP) is 7.1%.
| Range | Selected | |
| Cost of equity | 7.8% - 10.7% | 9.25% |
| Tax rate | 27.0% - 27.0% | 27% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 6.2% - 8.0% | 7.1% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 1.1 | 1.25 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.8% | 10.7% |
| Tax rate | 27.0% | 27.0% |
| Debt/Equity ratio | 0.62 | 0.62 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 6.2% | 8.0% |
| Selected WACC | 7.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| JMP | JMP Group LLC | 0.62 | 0.94 | 0.65 |
| HKIB | Amtd International Inc | 0.04 | 0.91 | 0.88 |
| IGEX | Indo Global Exchange(s) Pte Ltd | 0.06 | 0.16 | 0.16 |
| LGHL | Lion Group Holding Ltd | 1.16 | -0.27 | -0.15 |
| NTFL | Network 1 Financial Group Inc | 0.2 | -184.79 | -161.34 |
| QCA.CN | Quinsam Capital Corp | 0.89 | -0.34 | -0.21 |
| RCG.TO | RF Capital Group Inc | 1.28 | 0.19 | 0.1 |
| SIEB | Siebert Financial Corp | 1.16 | 0.98 | 0.53 |
| SRL | Scully Royalty Ltd | 0.29 | 0.27 | 0.22 |
| WSFL | Woodstock Holdings Inc | 3380.65 | -0.89 | 0 |
| Low | High | |
| Unlevered beta | 0.06 | 0.18 |
| Relevered beta | 1.15 | 1.37 |
| Adjusted relevered beta | 1.1 | 1.25 |
JMP'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 JMP:
cost_of_equity (9.25%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (1.1) + 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.