The WACC of Seacoast Banking Corporation of Florida (SBCF) is 8.9%.
Range | Selected | |
Cost of equity | 8.4% - 10.8% | 9.6% |
Tax rate | 22.5% - 22.6% | 22.55% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 7.8% - 10.0% | 8.9% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 0.98 | 1.06 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 8.4% | 10.8% |
Tax rate | 22.5% | 22.6% |
Debt/Equity ratio | 0.13 | 0.13 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 7.8% | 10.0% |
Selected WACC | 8.9% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
SBCF | Seacoast Banking Corporation of Florida | 0.13 | 1.05 | 0.96 |
BANF | BancFirst Corp | 0.02 | 1.05 | 1.03 |
BUSE | First Busey Corp | 0.21 | 0.18 | 0.16 |
CHCO | City Holding Co | 0.18 | 0.61 | 0.54 |
EFSC | Enterprise Financial Services Corp | 0.21 | 0.85 | 0.73 |
FBK | FB Financial Corp | 0.08 | 1.17 | 1.1 |
NBTB | NBT Bancorp Inc | 0.18 | 0.98 | 0.86 |
PRK | Park National Corp | 0.1 | 0.96 | 0.89 |
TBK | Triumph Bancorp Inc | 0.12 | 1.15 | 1.05 |
VBTX | Veritex Holdings Inc | 0.15 | 1.18 | 1.06 |
Low | High | |
Unlevered beta | 0.88 | 0.99 |
Relevered beta | 0.97 | 1.09 |
Adjusted relevered beta | 0.98 | 1.06 |
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 SBCF:
cost_of_equity (9.60%) = 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.