Using the Earnings Power Value framework with a WACC of 7.4% and normalized earnings of $1.1B, Kimco Realty Corporation has a fair value of $10.18 per share. The EPV range is $6.37 – $15.92 based on WACC sensitivity (5.9% – 8.9%).
| Low | Selected | High | |
|---|---|---|---|
| Normalized Earnings | 1,136 | 1,136 | 1,136 |
| (/) WACC | 8.9% | 7.4% | 5.9% |
| Enterprise Value | 12,723 | 15,293 | 19,163 |
| (-) Net debt | 8,428 | 8,428 | 8,428 |
| Equity Value | 4,296 | 6,865 | 10,736 |
| (/) Outstanding shares | 674 | 674 | 674 |
| Fair Price | $6.37 | $10.18 | $15.92 |
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.