SCHW
Charles Schwab Corp
Price:  
84.47 
USD
Volume:  
5,909,921.00
United States | Capital Markets
Valuation
Overview
Financials
Forecast
Compare
Historical Price
SolvencyDividends
Transactions
People

Schwab WACC - Weighted Average Cost of Capital

The WACC of Charles Schwab Corp (SCHW) is 7.1%.

The Cost of Equity of Charles Schwab Corp (SCHW) is 8.70%.
The Cost of Debt of Charles Schwab Corp (SCHW) is 8.20%.

Range Selected
Cost of equity 6.80% - 10.60% 8.70%
Tax rate 23.10% - 23.40% 23.25%
Cost of debt 4.00% - 12.40% 8.20%
WACC 4.3% - 9.9% 7.1%
WACC

Schwab WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.64 1.02
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.80% 10.60%
Tax rate 23.10% 23.40%
Debt/Equity ratio 1.99 1.99
Cost of debt 4.00% 12.40%
After-tax WACC 4.3% 9.9%
Selected WACC 7.1%

Schwab'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 Schwab:

cost_of_equity (8.70%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.64) + 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.