Using the Earnings Power Value framework with a WACC of 8.8% and normalized earnings of $823.1M, Broadridge Financial Solutions, Inc. has a fair value of $54.89 per share. The EPV range is $43.29 – $71.27 based on WACC sensitivity (7.3% – 10.3%).
| Low | Selected | High | |
|---|---|---|---|
| Normalized Earnings | 823 | 823 | 823 |
| (/) WACC | 10.3% | 8.8% | 7.3% |
| Enterprise Value | 8,018 | 9,390 | 11,329 |
| (-) Net debt | 2,898 | 2,898 | 2,898 |
| Equity Value | 5,121 | 6,493 | 8,432 |
| (/) Outstanding shares | 118 | 118 | 118 |
| Fair Price | $43.29 | $54.89 | $71.27 |
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.