Using the Earnings Power Value framework with a WACC of 8.9% and normalized earnings of $3.9B, Amphenol Corporation has a fair value of $31.44 per share. The EPV range is $26.39 – $38.55 based on WACC sensitivity (7.4% – 10.4%).
| Low | Selected | High | |
|---|---|---|---|
| Normalized Earnings | 3,944 | 3,944 | 3,944 |
| (/) WACC | 10.4% | 8.9% | 7.4% |
| Enterprise Value | 38,084 | 44,535 | 53,617 |
| (-) Net debt | 4,371 | 4,371 | 4,371 |
| Equity Value | 33,712 | 40,163 | 49,246 |
| (/) Outstanding shares | 1,278 | 1,278 | 1,278 |
| Fair Price | $26.39 | $31.44 | $38.55 |
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.