Using the Earnings Power Value framework with a WACC of 7.1% and normalized earnings of $1.8B, LyondellBasell Industries N.V. has a fair value of $40.73 per share. The EPV range is $26.79 – $62.20 based on WACC sensitivity (5.6% – 8.6%).
| Low | Selected | High | |
|---|---|---|---|
| Normalized Earnings | 1,810 | 1,810 | 1,810 |
| (/) WACC | 8.6% | 7.1% | 5.6% |
| Enterprise Value | 21,138 | 25,628 | 32,541 |
| (-) Net debt | 12,513 | 12,513 | 12,513 |
| Equity Value | 8,625 | 13,115 | 20,028 |
| (/) Outstanding shares | 322 | 322 | 322 |
| Fair Price | $26.79 | $40.73 | $62.20 |
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.