The WACC of Pathfinder Bancorp Inc (MARYLAND) (PBHC) is 6.6%.
Range | Selected | |
Cost of equity | 6.4% - 9.4% | 7.9% |
Tax rate | 16.4% - 18.2% | 17.3% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 5.6% - 7.6% | 6.6% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 0.54 | 0.8 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.4% | 9.4% |
Tax rate | 16.4% | 18.2% |
Debt/Equity ratio | 0.51 | 0.51 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 5.6% | 7.6% |
Selected WACC | 6.6% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
PBHC | Pathfinder Bancorp Inc (MARYLAND) | 0.51 | 0 | 0 |
ASRV | Ameriserv Financial Inc | 0.85 | 0.32 | 0.19 |
CWBC | Community West Bancshares | 0.18 | 0.91 | 0.8 |
EMCF | Emclaire Financial Corp | 0.08 | 0.26 | 0.25 |
FMBM | F & M Bank Corp | 0.09 | -0.18 | -0.17 |
FUSB | First US Bancshares Inc | 0.15 | 0.19 | 0.17 |
FXNC | First National Corp | 0.16 | 0.72 | 0.64 |
NWYF | Northway Financial Inc | 1.06 | 1.7 | 0.9 |
PNBK | Patriot National Bancorp Inc | 0.26 | 0.66 | 0.55 |
RIVE | Riverview Financial Corp | 1.59 | 1.07 | 0.46 |
Low | High | |
Unlevered beta | 0.22 | 0.5 |
Relevered beta | 0.31 | 0.7 |
Adjusted relevered beta | 0.54 | 0.8 |
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 PBHC:
cost_of_equity (7.90%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.54) + 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.