Using the Earnings Power Value framework with a WACC of 7.4% and normalized earnings of $2.8B, Boston Scientific Corporation has a fair value of $18.60 per share. The EPV range is $14.31 – $25.06 based on WACC sensitivity (5.9% – 8.9%).
| Low | Selected | High | |
|---|---|---|---|
| Normalized Earnings | 2,837 | 2,837 | 2,837 |
| (/) WACC | 8.9% | 7.4% | 5.9% |
| Enterprise Value | 31,766 | 38,177 | 47,831 |
| (-) Net debt | 10,373 | 10,373 | 10,373 |
| Equity Value | 21,393 | 27,804 | 37,458 |
| (/) Outstanding shares | 1,495 | 1,495 | 1,495 |
| Fair Price | $14.31 | $18.60 | $25.06 |
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.