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Enstar Group WACC %

:5.44% As of Today
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As of today (2021-09-25), Enstar Group's weighted average cost of capital is 5.44%. Enstar Group's ROIC % is 8.39% (calculated using TTM income statement data). Enstar Group generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.


Enstar Group WACC % Historical Data

The historical data trend for Enstar Group's WACC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Enstar Group Annual Data
Trend Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20
WACC %
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 7.17 5.77 5.72 6.28 4.71

Enstar Group Quarterly Data
Sep16 Dec16 Mar17 Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21
WACC % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 4.01 4.39 4.71 5.76 5.56

Competitive Comparison

For the Insurance - Diversified subindustry, Enstar Group's WACC %, along with its competitors' market caps and WACC % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

   

Enstar Group WACC % Distribution

For the Insurance industry and Financial Services sector, Enstar Group's WACC % distribution charts can be found below:

* The bar in red indicates where Enstar Group's WACC % falls into.



Enstar Group WACC % Calculation

The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. The WACC is commonly referred to as the firm's cost of capital. Generally speaking, a company's assets are financed by debt and equity. WACC is the average of the costs of these sources of financing, each of which is weighted by its respective use in the given situation. By taking a weighted average, we can see how much interest the company has to pay for every dollar it finances.

WACC=E/(E + D)*Cost of Equity+D/(E + D)*Cost of Debt*(1 - Tax Rate)

1. Weights:
Generally speaking, a company's assets are financed by debt and equity. We need to calculate the weight of equity and the weight of debt.
The market value of equity (E) is also called "Market Cap". As of today, Enstar Group's market capitalization (E) is $4307.390 Mil.
The market value of debt is typically difficult to calculate, therefore, GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding the latest two-year average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together. As of Jun. 2021, Enstar Group's latest two-year average Short-Term Debt & Capital Lease Obligation was $92.5 Mil and its latest two-year average Long-Term Debt & Capital Lease Obligation was $1189.733 Mil. The total Book Value of Debt (D) is $1282.233 Mil.
a) weight of equity = E / (E + D) = 4307.390 / (4307.390 + 1282.233) = 0.7706
b) weight of debt = D / (E + D) = 1282.233 / (4307.390 + 1282.233) = 0.2294

2. Cost of Equity:
GuruFocus uses Capital Asset Pricing Model (CAPM) to calculate the required rate of return. The formula is:
Cost of Equity = Risk-Free Rate of Return + Beta of Asset * (Expected Return of the Market - Risk-Free Rate of Return)
a) GuruFocus uses 10-Year Treasury Constant Maturity Rate as the risk-free rate. It is updated daily. The current risk-free rate is 1.47000000%. Please go to Economic Indicators page for more information. Please note that we use the 10-Year Treasury Constant Maturity Rate of the country/region where the company is headquartered. If the data for that country/region is not available, then we will use the 10-Year Treasury Constant Maturity Rate of the United States as default.
b) Beta is the sensitivity of the expected excess asset returns to the expected excess market returns. Enstar Group's beta is 0.71.
c) (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.
Cost of Equity = 1.47000000% + 0.71 * 6% = 5.73%

3. Cost of Debt:
GuruFocus uses last fiscal year end Interest Expense divided by the latest two-year average debt to get the simplified cost of debt.
As of Dec. 2020, Enstar Group's interest expense (positive number) was $57.977 Mil. Its total Book Value of Debt (D) is $1282.233 Mil.
Cost of Debt = 57.977 / 1282.233 = 4.5216%.

4. Multiply by one minus Average Tax Rate:
GuruFocus uses the latest two-year average tax rate to do the calculation.
The latest Two-year Average Tax Rate is 1.5%.

Enstar Group's Weighted Average Cost Of Capital (WACC) for Today is calculated as:

WACC=E / (E + D)*Cost of Equity+D / (E + D)*Cost of Debt*(1 - Tax Rate)
=0.7706*5.73%+0.2294*4.5216%*(1 - 1.5%)
=5.44%

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Enstar Group  (NAS:ESGR) WACC % Explanation

Because it costs money to raise capital. A firm that generates higher ROIC % than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, Enstar Group's weighted average cost of capital is 5.44%. Enstar Group's ROIC % is 8.39% (calculated using TTM income statement data). Enstar Group generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.


Be Aware

1. GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding latest two-year average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together.

2. The WACC formula discussed above does not include Preferred Stock. Please adjust if preferred stock is considered.

3. (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.

4. GuruFocus uses last fiscal year end Interest Expense divided by the latest two-year average debt to get the simplified cost of debt.


Related Terms

Enstar Group Business Description

Enstar Group logo
Industry
Financial Services » Insurance NAICS : 524126 SIC : 6331
Traded in Other Exchanges
Address
22 Queen Street, Windsor Place, 3rd Floor, Hamilton, BMU, HM JX
Enstar Group Ltd is a diversified insurance company that operates multiple segments, including non-life run-off, Atrium, and StarStone. Most of the company revenue is generated by its StarStone segment, which offers property, casualty, and specialty insurance products to clients of all sizes. The company's nonlife run-off segment operates a property and casualty business, along with consulting services and claims validation. Within this segment, Enstar looks to acquire companies or portfolios and successfully manage these assets. The Atrium segment involves underwriting operations and the financial results of Northshore Holdings and manages Syndicate 609, which directly underwrites specialist insurance and reinsurance at Lloyd's.
Executives
Taranto Audrey Bowen officer: General Counsel C/O 22 QUEEN STREET, WINDSOR PLACE 3RD FLOOR HAMILTON D0 HM11
Cross Susan Lee director XL HOUSE ONE BERMUDIANA ROAD HAMILTON D0 HM 11
Stone Point Capital Llc director 20 HORSENECK LANE GREENWICH CT 06830
Campbell Robert J director PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> Ownership Information: CAMPBELL ROBERT J a.header:link {color: #3b4fae; font-weight: bold; text-decoration: underline;} a.header:visited {color: #3b4fae; font-weight: bold; text-decoration: underline;} a.header:hover {color: #191970;}
Carey James D director STONE POINT CAPITAL LLC 20 HORSENECK LANE GREENWICH CT 06830
Patel Hiteshkumar R. director C/O 22 QUEEN STREET, WINDSOR STREET 3RD FLOOR HAMILTON D0 HM 11
Gerhardt Hans-peter director C/O 22 QUEEN STREET, WINDSOR PLACE 3RD FLOOR HAMILTON D0 HM11
Hendry Willard Myron Jr director C/O 22 QUEEN STREET WINDSOR PLACE, 3RD FLOOR HAMILTON D0 HM 11
Liu Jie director C/O 22 QUEEN STREET WINDSOR PL, 3RD FL HAMILTON D0 HM 11
Becker Bernard F. director C/O 22 QUEEN STREET,, WINDSOR PLACE 3RD FLOOR HAMILTON D0 HM11
Brockman Paul Michael James officer: President and CEO, Enstar (US) C/O 22 QUEEN STREET, WINDSOR PLACE 3RD FLOOR HAMILTON D0 HM 11
Bowker Guy Thomas Anthony officer: Chief Financial Officer C/O 22 QUEEN STREET, WINDSOR PLACE 3RD FLOOR HAMILTON D0 HM 11
Atkins David John officer: CEO, Enstar (EU) Limited C/O 22 QUEEN STREET, WINDSOR PLACE 3RD FLOOR HAMILTON D0 HM 11
Al Obaidat Nazar officer: Chief Investment Officer C/O 22 QUEEN STREET WINDSOR PLACE, 3RD FLOOR HAMILTON D0 HM 11
Silvester Dominic Francis Michael director, officer: Chief Executive Officer C/O CASTLEWOOD HOLDINGS LIMITED PO BOX HM 2267, WINDSOR PL., 18 QUEEN ST HAMILTON D0 HM JX
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