Using the Earnings Power Value framework with a WACC of 6.4% and normalized earnings of $6.2B, American Tower Corporation has a fair value of $113.87 per share. The EPV range is $74.86 – $176.56 based on WACC sensitivity (4.9% – 7.9%).
| Low | Selected | High | |
|---|---|---|---|
| Normalized Earnings | 6,244 | 6,244 | 6,244 |
| (/) WACC | 7.9% | 6.4% | 4.9% |
| Enterprise Value | 78,609 | 96,911 | 126,322 |
| (-) Net debt | 43,489 | 43,489 | 43,489 |
| Equity Value | 35,120 | 53,422 | 82,833 |
| (/) Outstanding shares | 469 | 469 | 469 |
| Fair Price | $74.86 | $113.87 | $176.56 |
Earnings Power Value (EPV) estimates what a company is worth based on its current normalized earnings, assuming zero growth. It values the business as a perpetuity: Normalized Earnings / WACC. This gives a conservative floor value — the company's worth if it never grows but maintains its current profitability.
The model normalizes earnings by: (1) using sustainable gross margins (5-year average) applied to current revenue, (2) deducting maintenance-level operating expenses (average R&D + SG&A as % of revenue), (3) applying the average effective tax rate, and (4) subtracting the average excess of CapEx over D&A (net reinvestment needed to maintain current capacity).
EPV is most useful as a comparison anchor: if the market price is below EPV, the stock may be undervalued even without any growth. If market price exceeds EPV, the premium reflects growth expectations — which may or may not materialize.