PFSI
PennyMac Financial Services Inc
Price:  
98.38 
USD
Volume:  
178,771.00
United States | Thrifts & Mortgage Finance
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PFSI WACC - Weighted Average Cost of Capital

The WACC of PennyMac Financial Services Inc (PFSI) is 9.2%.

The Cost of Equity of PennyMac Financial Services Inc (PFSI) is 6.95%.
The Cost of Debt of PennyMac Financial Services Inc (PFSI) is 13.55%.

Range Selected
Cost of equity 5.80% - 8.10% 6.95%
Tax rate 24.60% - 26.30% 25.45%
Cost of debt 6.20% - 20.90% 13.55%
WACC 5.0% - 13.5% 9.2%
WACC

PFSI WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.43 0.57
Additional risk adjustments 0.0% 0.5%
Cost of equity 5.80% 8.10%
Tax rate 24.60% 26.30%
Debt/Equity ratio 2.84 2.84
Cost of debt 6.20% 20.90%
After-tax WACC 5.0% 13.5%
Selected WACC 9.2%

PFSI'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 PFSI:

cost_of_equity (6.95%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.43) + 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.