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Security National Financial WACC %

:4.75% (As of Today)
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As of today (2021-10-16), Security National Financial's weighted average cost of capital is 4.75%. Security National Financial's ROIC % is 4.61% (calculated using TTM income statement data). Security National Financial earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Security National Financial WACC % Historical Data

The historical data trend for Security National Financial'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.

Security National Financial 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 3.67 1.37 0.28 2.42 4.02

Security National Financial 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 3.83 3.36 4.02 4.76 4.42

Competitive Comparison

For the Credit Services subindustry, Security National Financial'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.

   

Security National Financial WACC % Distribution

For the Credit Services industry and Financial Services sector, Security National Financial's WACC % distribution charts can be found below:

* The bar in red indicates where Security National Financial's WACC % falls into.



Security National Financial 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, Security National Financial's market capitalization (E) is $166.833 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, Security National Financial's latest two-year average Short-Term Debt & Capital Lease Obligation was $1.25 Mil and its latest two-year average Long-Term Debt & Capital Lease Obligation was $256.4485 Mil. The total Book Value of Debt (D) is $257.6985 Mil.
a) weight of equity = E / (E + D) = 166.833 / (166.833 + 257.6985) = 0.393
b) weight of debt = D / (E + D) = 257.6985 / (166.833 + 257.6985) = 0.607

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 1.59000000%. 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. Security National Financial's beta is 1.08.
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 = 1.59000000% + 1.08 * 6% = 8.07%

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, Security National Financial's interest expense (positive number) was $8.579 Mil. Its total Book Value of Debt (D) is $257.6985 Mil.
Cost of Debt = 8.579 / 257.6985 = 3.3291%.

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 22.03%.

Security National Financial'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)
=0.393*8.07%+0.607*3.3291%*(1 - 22.03%)
=4.75%

* 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.


Security National Financial  (NAS:SNFCA) 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, Security National Financial's weighted average cost of capital is 4.75%. Security National Financial's ROIC % is 4.61% (calculated using TTM income statement data). Security National Financial 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

Security National Financial Business Description

Security National Financial logo
Industry
Financial Services » Credit Services NAICS : 522390 SIC : 6162
Traded in Other Exchanges
Address
123 West Election Road, Draper, UT, USA, 84020
Security National Financial Corp is engaged in the life insurance, cemetery and mortuary, and mortgage loan businesses. The life insurance segment is engaged in the business of selling and servicing selected lines of life insurance, annuity products, and accident and health insurance. Its cemetery and mortuary segment consists of approximately seven mortuaries and five cemeteries in the state of Utah and a cemetery in the state of California. The mortgage loan segment originates and underwrites or otherwise purchases residential and commercial loans for new construction, existing homes, and real estate projects. Geographically all the business activity is functioned through the region of US and it derives the majority of revenue from Mortgage segment.
Executives
Fuller Gilbert A director 55 WANDERWOOD WAY SANDY UT 84092
Quist Scott M director, 10 percent owner, officer: Chairman of the Board/Pres/CEO 7 WANDERWOOD WAY SANDY UT 84092
Quist Adam George officer: Vice Pres / General Counsel 4057 SOUTH OLIVIA VIEW LANE SALT LAKE CITY UT 84107
Johnson Stephen Charles officer: VP - Mortgage Operations 886 SOUTH ROUECHE LANE KAYSVILLE UT 84037
Cook John L director 2424 SUMMER OAK CIRCLE SANDY UT 84092
Overbaugh Jason G. director, officer: VP/Ntnl Marketing Dir-Life Ins 13471 SOUTH TUSCALEE WAY DRAPER UT 84020
Quist S. Andrew director, officer: Vice Pres / General Counsel 272 EAST BROADLEAF CIRCLE DRAPER UT 84020
Stephens Jeffrey Russell officer: Sr Gen Counsel/Corp Secretary 38 NORTHRIDGE WAY SANDY UT 84092
Moody H. Craig director 11892 SOUTH BROOKGLEN DRIVE SANDY UT 84092
Wilbur Norman G director 2637 MUSTANG DRIVE MEAD CO 80542
Hunter Robert Gail director 2 RAVENWOOD LANE SANDY UT 84092
Sill Garrett S. officer: CFO and Treasurer 2463 SOUTH 1375 WEST SYRACUSE UT 84075
Christie Q. Overbaugh officer: Sr. VP Life Ins. Inter. Op. 13471 SOUTH TUSCALEE WAY DRAPER UT 84020
Jordan Capital Am, Llc 10 percent owner 3500 PIEDMONT RD NE, SUITE 330 ATLANTA GA 30305
Beckstead J. Lynn Jr. director, officer: VP Mortgage Operations 190 NORTH MATTERHORN DRIVE ALPINE UT 84004
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