PEBC WACC - Weighted Average Cost of Capital
The WACC of Peoples Bancorp Inc (PEBC) is 6.2%.
| Range | Selected | |
| Cost of equity | 5.6% - 7.2% | 6.4% |
| Tax rate | 37.1% - 37.3% | 37.2% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.5% - 7.0% | 6.2% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.39 | 0.42 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.6% | 7.2% |
| Tax rate | 37.1% | 37.3% |
| Debt/Equity ratio | 0.07 | 0.07 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.5% | 7.0% |
| Selected WACC | 6.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| PEBC | Peoples Bancorp Inc | 0.07 | 0.17 | 0.16 |
| AMFC | AMB Financial Corp | 0.15 | 0 | 0 |
| BKOR | Oak Ridge Financial Services Inc | 0.38 | -0.05 | -0.04 |
| CCBC | Chino Commercial Bancorp | 0.41 | -0.43 | -0.34 |
| CIWV | Citizens Financial Corp | 0.67 | 0.13 | 0.09 |
| FRFC | First Robinson Financial Cororation | 3.28 | 0.2 | 0.06 |
| LSFG | Lifestore Financial Group Inc | 0.57 | 0.15 | 0.11 |
| MFBP | M&F Bancorp Inc | 0 | 0.31 | 0.31 |
| NEFB | Neffs Bancorp Inc | 0.3 | 0.31 | 0.26 |
| PCLB | Pinnacle Bancshares Inc | 0.4 | 0.26 | 0.21 |
| Low | High | |
| Unlevered beta | 0.08 | 0.13 |
| Relevered beta | 0.09 | 0.13 |
| Adjusted relevered beta | 0.39 | 0.42 |
PEBC'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 PEBC:
cost_of_equity (6.40%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.39) + 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.