Using the Earnings Power Value framework with a WACC of 10.1% and normalized earnings of $105.5B, JPMorgan Chase & Co. has a fair value of $317.27 per share. The EPV range is $269.04 – $382.30 based on WACC sensitivity (8.6% – 11.6%).
| Low | Selected | High | |
|---|---|---|---|
| Normalized Earnings | 105,463 | 105,463 | 105,463 |
| (/) WACC | 11.6% | 10.1% | 8.6% |
| Enterprise Value | 908,256 | 1,042,991 | 1,224,664 |
| (-) Net debt | 156,644 | 156,644 | 156,644 |
| Equity Value | 751,612 | 886,347 | 1,068,020 |
| (/) Outstanding shares | 2,794 | 2,794 | 2,794 |
| Fair Price | $269.04 | $317.27 | $382.30 |
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.