Using the Earnings Power Value framework with a WACC of 6.7% and normalized earnings of $778.1M, The Mosaic Company has a fair value of $20.93 per share. The EPV range is $14.20 – $31.57 based on WACC sensitivity (5.2% – 8.2%).
| Low | Selected | High | |
|---|---|---|---|
| Normalized Earnings | 778 | 778 | 778 |
| (/) WACC | 8.2% | 6.7% | 5.2% |
| Enterprise Value | 9,532 | 11,677 | 15,069 |
| (-) Net debt | 5,003 | 5,003 | 5,003 |
| Equity Value | 4,529 | 6,674 | 10,067 |
| (/) Outstanding shares | 319 | 319 | 319 |
| Fair Price | $14.20 | $20.93 | $31.57 |
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.