Using the Earnings Power Value framework with a WACC of 5.8% and normalized earnings of $1.9B, Eversource Energy has a fair value of $5.42 per share. The EPV range is $0.00 – $35.53 based on WACC sensitivity (4.3% – 7.3%).
| Low | Selected | High | |
|---|---|---|---|
| Normalized Earnings | 1,870 | 1,870 | 1,870 |
| (/) WACC | 7.3% | 5.8% | 4.3% |
| Enterprise Value | 25,562 | 32,157 | 43,338 |
| (-) Net debt | 30,146 | 30,146 | 30,146 |
| Equity Value | -4,584 | 2,011 | 13,191 |
| (/) Outstanding shares | 371 | 371 | 371 |
| Fair Price | $0.00 | $5.42 | $35.53 |
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.