Using the Earnings Power Value framework with a WACC of 8.4% and normalized earnings of $5.8B, Dell Technologies Inc. has a fair value of $70.33 per share. The EPV range is $55.40 – $91.73 based on WACC sensitivity (6.9% – 9.9%).
| Low | Selected | High | |
|---|---|---|---|
| Normalized Earnings | 5,841 | 5,841 | 5,841 |
| (/) WACC | 9.9% | 8.4% | 6.9% |
| Enterprise Value | 58,863 | 69,345 | 84,369 |
| (-) Net debt | 19,975 | 19,975 | 19,975 |
| Equity Value | 38,888 | 49,370 | 64,394 |
| (/) Outstanding shares | 702 | 702 | 702 |
| Fair Price | $55.40 | $70.33 | $91.73 |
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.