Using the Earnings Power Value framework with a WACC of 5.7% and normalized earnings of $2.0B, BXP, Inc. has a fair value of $119.93 per share. The EPV range is $74.08 – $198.56 based on WACC sensitivity (4.2% – 7.2%).
| Low | Selected | High | |
|---|---|---|---|
| Normalized Earnings | 1,989 | 1,989 | 1,989 |
| (/) WACC | 7.2% | 5.7% | 4.2% |
| Enterprise Value | 27,650 | 34,933 | 47,426 |
| (-) Net debt | 15,881 | 15,881 | 15,881 |
| Equity Value | 11,769 | 19,053 | 31,545 |
| (/) Outstanding shares | 159 | 159 | 159 |
| Fair Price | $74.08 | $119.93 | $198.56 |
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.