The January 2021 issue of Hardball With Hitchner includes the results of polls that reveal what sources valuation practitioners use for developing cost of equity capital (COEC) estimates. The results of the polls taken in 2020 show that the Duff & Phelps data are “widely used and accepted” and that the BVR Cost of Capital Professional has “gained usage,” Hitchner says (see below)
Analysts’ Usage Percentages of COEC Data Vendors
| COEC Source | 2/25/2020 | 1/21/2020 |
|---|---|---|
| Duff & Phelps Navigator | 84% | 92% |
| BVResources COC Pro | 24% | 21% |
| Damadoran’s data | 13% | 12% |
| Pepperdine survey | 8% | 13% |
| Other or none of the above | 13% | 7% |
| (Source: Hardball With Hitchner, Issue 3, January 2021) | ||
“Damodaran’s data” refers to the work of Professor Aswath Damodaran (New York University Stern School of Business), who publishes a huge amount of free data on his website. The Pepperdine survey refers the Private Capital Markets Project from Pepperdine University, an analysis based on an ongoing survey of expected rates of return of providers in the private capital market.
During a conference session in 2019, Hitchner used both the Navigator and Cost of Capital Professional platforms on a hypothetical company. The result was a cost of equity range from both platforms that was “not that much different,” he said. Full coverage of that session is in an article, “BVR and Duff & Phelps Cost of Capital Platforms Go Head-to-Head at VSCPA,” which appeared in the November 2019 issue of Business Valuation Update.
Hardball With Hitchner is a monthly publication written by James Hitchner (Valuation Products and Services). For subscription information, click here.