Using the Earnings Power Value framework with a WACC of 7.2% and normalized earnings of $2.2B, GE HealthCare Technologies Inc. has a fair value of $53.89 per share. The EPV range is $42.50 – $71.30 based on WACC sensitivity (5.7% – 8.7%).
| Low | Selected | High | |
|---|---|---|---|
| Normalized Earnings | 2,172 | 2,172 | 2,172 |
| (/) WACC | 8.7% | 7.2% | 5.7% |
| Enterprise Value | 25,052 | 30,293 | 38,307 |
| (-) Net debt | 5,491 | 5,491 | 5,491 |
| Equity Value | 19,561 | 24,802 | 32,816 |
| (/) Outstanding shares | 460 | 460 | 460 |
| Fair Price | $42.50 | $53.89 | $71.30 |
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.