Using the Earnings Power Value framework with a WACC of 7.0% and normalized earnings of $647.6M, Aptiv PLC has a fair value of $13.78 per share. The EPV range is $6.33 – $25.30 based on WACC sensitivity (5.5% – 8.5%).
| Low | Selected | High | |
|---|---|---|---|
| Normalized Earnings | 648 | 648 | 648 |
| (/) WACC | 8.5% | 7.0% | 5.5% |
| Enterprise Value | 7,641 | 9,284 | 11,828 |
| (-) Net debt | 6,243 | 6,243 | 6,243 |
| Equity Value | 1,398 | 3,041 | 5,585 |
| (/) Outstanding shares | 221 | 221 | 221 |
| Fair Price | $6.33 | $13.78 | $25.30 |
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.