Using the Earnings Power Value framework with a WACC of 8.4% and normalized earnings of $1.1B, Dover Corporation has a fair value of $75.92 per share. The EPV range is $62.15 – $95.65 based on WACC sensitivity (6.9% – 9.9%).
| Low | Selected | High | |
|---|---|---|---|
| Normalized Earnings | 1,060 | 1,060 | 1,060 |
| (/) WACC | 9.9% | 8.4% | 6.9% |
| Enterprise Value | 10,680 | 12,581 | 15,304 |
| (-) Net debt | 2,102 | 2,102 | 2,102 |
| Equity Value | 8,578 | 10,479 | 13,202 |
| (/) Outstanding shares | 138 | 138 | 138 |
| Fair Price | $62.15 | $75.92 | $95.65 |
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.