KFS
Kingsway Financial Services Inc
Price:  
12.86 
USD
Volume:  
47,248.00
United States | Insurance
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KFS WACC - Weighted Average Cost of Capital

The WACC of Kingsway Financial Services Inc (KFS) is 7.0%.

The Cost of Equity of Kingsway Financial Services Inc (KFS) is 7.40%.
The Cost of Debt of Kingsway Financial Services Inc (KFS) is 5.00%.

Range Selected
Cost of equity 5.90% - 8.90% 7.40%
Tax rate 11.40% - 15.00% 13.20%
Cost of debt 5.00% - 5.00% 5.00%
WACC 5.7% - 8.3% 7.0%
WACC

KFS WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.44 0.73
Additional risk adjustments 0.0% 0.5%
Cost of equity 5.90% 8.90%
Tax rate 11.40% 15.00%
Debt/Equity ratio 0.16 0.16
Cost of debt 5.00% 5.00%
After-tax WACC 5.7% 8.3%
Selected WACC 7.0%

KFS'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 KFS:

cost_of_equity (7.40%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.44) + 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.