Using the Earnings Power Value framework with a WACC of 7.3% and normalized earnings of $2.6B, Cencora, Inc. has a fair value of $152.54 per share. The EPV range is $120.89 – $200.63 based on WACC sensitivity (5.8% – 8.8%).
| Low | Selected | High | |
|---|---|---|---|
| Normalized Earnings | 2,627 | 2,627 | 2,627 |
| (/) WACC | 8.8% | 7.3% | 5.8% |
| Enterprise Value | 29,952 | 36,130 | 45,519 |
| (-) Net debt | 6,353 | 6,353 | 6,353 |
| Equity Value | 23,599 | 29,777 | 39,166 |
| (/) Outstanding shares | 195 | 195 | 195 |
| Fair Price | $120.89 | $152.54 | $200.63 |
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.