Using the Earnings Power Value framework with a WACC of 9.0% and normalized earnings of $1.2B, Fidelity National Information Services, Inc. has a fair value of $19.03 per share. The EPV range is $15.39 – $24.12 based on WACC sensitivity (7.5% – 10.5%).
| Low | Selected | High | |
|---|---|---|---|
| Normalized Earnings | 1,202 | 1,202 | 1,202 |
| (/) WACC | 10.5% | 9.0% | 7.5% |
| Enterprise Value | 11,399 | 13,290 | 15,933 |
| (-) Net debt | 3,414 | 3,414 | 3,414 |
| Equity Value | 7,985 | 9,876 | 12,519 |
| (/) Outstanding shares | 519 | 519 | 519 |
| Fair Price | $15.39 | $19.03 | $24.12 |
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.