NHC WACC - Weighted Average Cost of Capital
The WACC of National Healthcare Corp (NHC) is 9.9%.
| Range | Selected | |
| Cost of equity | 5.9% - 8.5% | 7.2% |
| Tax rate | 23.1% - 25.7% | 24.4% |
| Cost of debt | 4.5% - 103.1% | 53.8% |
| WACC | 5.7% - 14.0% | 9.9% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.45 | 0.65 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.9% | 8.5% |
| Tax rate | 23.1% | 25.7% |
| Debt/Equity ratio | 0.09 | 0.09 |
| Cost of debt | 4.5% | 103.1% |
| After-tax WACC | 5.7% | 14.0% |
| Selected WACC | 9.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| NHC | National Healthcare Corp | 0.09 | 0.58 | 0.55 |
| BKD | Brookdale Senior Living Inc | 3.19 | 0.27 | 0.08 |
| CYH | Community Health Systems Inc | 23.32 | 0.93 | 0.05 |
| DVCR | Diversicare Healthcare Services Inc | 0.86 | 0.9 | 0.55 |
| EXE.TO | Extendicare Inc | 0.24 | 0.42 | 0.36 |
| FVE | Five Star Senior Living Inc | 0.13 | 0.95 | 0.87 |
| GRST | Ethema Health Corp | 2.23 | -0.28 | -0.1 |
| HNGR | Hanger Inc | 0.71 | 1.32 | 0.86 |
| IMAC | IMAC Holdings Inc | 0.01 | -1 | -0.99 |
| SIA.TO | Sienna Senior Living Inc | 0.63 | 0.29 | 0.2 |
| Low | High | |
| Unlevered beta | 0.15 | 0.43 |
| Relevered beta | 0.18 | 0.48 |
| Adjusted relevered beta | 0.45 | 0.65 |
NHC'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 NHC:
cost_of_equity (7.20%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.45) + 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.