STC
Stewart Information Services Corp
Price:  
66.91 
USD
Volume:  
56,863.00
United States | Insurance
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STC WACC - Weighted Average Cost of Capital

The WACC of Stewart Information Services Corp (STC) is 6.9%.

The Cost of Equity of Stewart Information Services Corp (STC) is 7.65%.
The Cost of Debt of Stewart Information Services Corp (STC) is 5.00%.

Range Selected
Cost of equity 6.60% - 8.70% 7.65%
Tax rate 22.10% - 22.60% 22.35%
Cost of debt 5.00% - 5.00% 5.00%
WACC 6.1% - 7.8% 6.9%
WACC

STC WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.6 0.69
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.60% 8.70%
Tax rate 22.10% 22.60%
Debt/Equity ratio 0.24 0.24
Cost of debt 5.00% 5.00%
After-tax WACC 6.1% 7.8%
Selected WACC 6.9%

STC'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 STC:

cost_of_equity (7.65%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.6) + 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.