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Randolph Bancorp WACC %

:7.27% (As of Today)
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As of today (2022-01-28), Randolph Bancorp's weighted average cost of capital is 7.27%. Randolph Bancorp's ROIC % is 0.00% (calculated using TTM income statement data). Randolph Bancorp earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Randolph Bancorp WACC % Historical Data

The historical data trend for Randolph Bancorp'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.

Randolph Bancorp Annual Data
Trend Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20
WACC %
Premium Member Only Premium Member Only 8.34 6.90 7.64 6.71 6.05

Randolph Bancorp Quarterly Data
Dec16 Mar17 Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21
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 6.38 6.05 6.53 6.23 5.72

Competitive Comparison

For the Banks - Regional subindustry, Randolph Bancorp'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.

   

Randolph Bancorp WACC % Distribution

For the Banks industry and Financial Services sector, Randolph Bancorp's WACC % distribution charts can be found below:

* The bar in red indicates where Randolph Bancorp's WACC % falls into.



Randolph Bancorp 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, Randolph Bancorp's market capitalization (E) is $127.846 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 Sep. 2021, Randolph Bancorp's latest two-year average Short-Term Debt & Capital Lease Obligation was $0 Mil and its latest two-year average Long-Term Debt & Capital Lease Obligation was $53.149 Mil. The total Book Value of Debt (D) is $53.149 Mil.
a) weight of equity = E / (E + D) = 127.846 / (127.846 + 53.149) = 0.7064
b) weight of debt = D / (E + D) = 53.149 / (127.846 + 53.149) = 0.2936

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 1.78000000%. 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. Randolph Bancorp's beta is 0.88.
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 = 1.78000000% + 0.88 * 6% = 7.06%

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, Randolph Bancorp's interest expense (positive number) was $4.721 Mil. Its total Book Value of Debt (D) is $53.149 Mil.
Cost of Debt = 4.721 / 53.149 = 8.8826%.

4. Multiply by one minus Average Tax Rate:
GuruFocus uses the latest two-year average tax rate to do the calculation. The calculated average tax rate is limited to between 0% and 100%. If the calculated average tax rate is higher than 100%, it is set to 100%. If the calculated average tax rate is less than 0%, it is set to 0%.
The latest Two-year Average Tax Rate is 12.445%.

Randolph Bancorp'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)
=0.7064*7.06%+0.2936*8.8826%*(1 - 12.445%)
=7.27%

* 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.


Randolph Bancorp  (NAS:RNDB) 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, Randolph Bancorp's weighted average cost of capital is 7.27%. Randolph Bancorp's ROIC % is 0.00% (calculated using TTM income statement data). Randolph Bancorp earns returns that do not match up to its cost of capital. It will destroy value as it grows.


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

Randolph Bancorp Business Description

Randolph Bancorp logo
Industry
Financial Services » Banks NAICS : 522110 SIC : 6022
Traded in Other Exchanges
N/A
Address
10 Cabot Place, Stoughton, MA, USA, 02072
Randolph Bancorp Inc is a bank holding company of Envision Bank. The company is engaged in providing financial services to individuals, families, and small to mid-size businesses. The business of the company includes accepting deposits from the public and investing those deposits, commercial real estate loans, construction loans, investment securities, and consumer loans. The firm also offers deposit accounts, certificates of deposit, and money market accounts.
Executives
Kirwin Ryan J. officer: EVP/Residential Lending C/O RANDOLPH BANCORP, INC. 10 CABOT PLACE STOUGHTON MA 02072
Parent William M director, officer: President and CEO C/O GRAIL INVESTMENT CORP. 767 THIRD AVENUE, 21ST FLOOR NEW YORK NY 10017
Olson Richard D. Jr. officer: SVP/Retail & Marketing C/O RANDOLPH BANCORP, INC. 10 CABOT PLACE STOUGHTON MA 02072
Pierce Richard C. director C/O RANDOLPH BANCORP, INC. 10 CABOT PLACE STOUGHTON MA 02072
Wentzell Janis E. director C/O RANDOLPH BANCORP, INC. 10 CABOT PLACE STOUGHTON MA 02072
Welch James G. director C/O RANDOLPH BANCORP, INC. 10 CABOT PLACE STOUGHTON MA 02072
Trubiano Louis J. director C/O RANDOLPH BANCORP, INC. 10 CABOT PLACE STOUGHTON MA 02072
Joyce Daniel M. director C/O RANDOLPH BANCORP, INC. 10 CABOT PLACE STOUGHTON MA 02072
Messmore Lauren officer: EVP, CFO and Treasurer 320 NORWOOD PARK SOUTH NORWOOD MA 02062
Quigley Kenneth K Jr director PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> Ownership Information: QUIGLEY KENNETH K JR 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;}
Foresta Thomas A. officer: SVP/CIO C/O RANDOLPH BANCORP, INC. 10 CABOT PLACE STOUGHTON MA 02072
Curry Nancy J. officer: SVP/Commercial Lending C/O RANDOLPH BANCORP, INC. 10 CABOT PLACE STOUGHTON MA 02072
Thaxter Donna L. officer: SVP/Residential Operations C/O RANDOLPH BANCORP, INC. 10 CABOT PLACE STOUGHTON MA 02072
Devlin Michael K officer: EVP, CFO and Treasurer C/O RANDOLPH BANCORP, INC. 10 CABOT PLACE STOUGHTON MA 02072
Mcdonough James P director, officer: President and CEO C/O RANDOLPH BANCORP, INC. 10 CABOT PLACE STOUGHTON MA 02072
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