Using the Earnings Power Value framework with a WACC of 6.7% and normalized earnings of $913.9M, Church & Dwight Co., Inc. has a fair value of $48.69 per share. The EPV range is $38.41 – $64.94 based on WACC sensitivity (5.2% – 8.2%).
| Low | Selected | High | |
|---|---|---|---|
| Normalized Earnings | 914 | 914 | 914 |
| (/) WACC | 8.2% | 6.7% | 5.2% |
| Enterprise Value | 11,180 | 13,692 | 17,660 |
| (-) Net debt | 1,796 | 1,796 | 1,796 |
| Equity Value | 9,383 | 11,896 | 15,864 |
| (/) Outstanding shares | 244 | 244 | 244 |
| Fair Price | $38.41 | $48.69 | $64.94 |
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.