PTRS WACC - Weighted Average Cost of Capital
The WACC of Partners Bancorp (PTRS) is 6.1%.
| Range | Selected | |
| Cost of equity | 6.0% - 7.8% | 6.9% |
| Tax rate | 23.9% - 27.1% | 25.5% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.5% - 6.8% | 6.1% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.47 | 0.53 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.0% | 7.8% |
| Tax rate | 23.9% | 27.1% |
| Debt/Equity ratio | 0.35 | 0.35 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.5% | 6.8% |
| Selected WACC | 6.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| PTRS | Partners Bancorp | 0.35 | 0.3 | 0.24 |
| BNCC | BNCCorp Inc | 0.16 | 0.24 | 0.22 |
| ENBP | ENB Financial Corp | 0.41 | 0.07 | 0.06 |
| FKYS | First Keystone Corp | 0.5 | -0.02 | -0.02 |
| LARK | Landmark Bancorp Inc | 0.22 | 0.12 | 0.1 |
| NWYF | Northway Financial Inc | 1.06 | 1.7 | 0.95 |
| OPOF | Old Point Financial Corp | 0.16 | -0.44 | -0.39 |
| PFLC | Pacific Financial Corp | 0.89 | 0.26 | 0.16 |
| RF | Regions Financial Corp | 0.18 | 1.13 | 0.99 |
| UNB | Union Bankshares Inc | 0.13 | 0.78 | 0.71 |
| Low | High | |
| Unlevered beta | 0.13 | 0.22 |
| Relevered beta | 0.21 | 0.3 |
| Adjusted relevered beta | 0.47 | 0.53 |
PTRS'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 PTRS:
cost_of_equity (6.90%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.47) + 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.