PNFP
Pinnacle Financial Partners Inc
Price:  
117.83 
USD
Volume:  
381,903.00
United States | Banks
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PNFP WACC - Weighted Average Cost of Capital

The WACC of Pinnacle Financial Partners Inc (PNFP) is 9.5%.

The Cost of Equity of Pinnacle Financial Partners Inc (PNFP) is 9.90%.
The Cost of Debt of Pinnacle Financial Partners Inc (PNFP) is 5.00%.

Range Selected
Cost of equity 8.40% - 11.40% 9.90%
Tax rate 18.80% - 19.30% 19.05%
Cost of debt 5.00% - 5.00% 5.00%
WACC 8.1% - 10.9% 9.5%
WACC

PNFP WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.98 1.17
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.40% 11.40%
Tax rate 18.80% 19.30%
Debt/Equity ratio 0.07 0.07
Cost of debt 5.00% 5.00%
After-tax WACC 8.1% 10.9%
Selected WACC 9.5%

PNFP'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 PNFP:

cost_of_equity (9.90%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.98) + 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.