Using the Earnings Power Value framework with a WACC of 8.1% and normalized earnings of $3.6B, Marriott International, Inc. has a fair value of $100.60 per share. The EPV range is $75.26 – $137.43 based on WACC sensitivity (6.6% – 9.6%).
| Low | Selected | High | |
|---|---|---|---|
| Normalized Earnings | 3,562 | 3,562 | 3,562 |
| (/) WACC | 9.6% | 8.1% | 6.6% |
| Enterprise Value | 36,999 | 43,828 | 53,749 |
| (-) Net debt | 16,725 | 16,725 | 16,725 |
| Equity Value | 20,274 | 27,103 | 37,024 |
| (/) Outstanding shares | 269 | 269 | 269 |
| Fair Price | $75.26 | $100.60 | $137.43 |
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.