Using the Earnings Power Value framework with a WACC of 7.1% and normalized earnings of $2.3B, Nasdaq, Inc. has a fair value of $40.16 per share. The EPV range is $30.35 – $55.26 based on WACC sensitivity (5.6% – 8.6%).
| Low | Selected | High | |
|---|---|---|---|
| Normalized Earnings | 2,278 | 2,278 | 2,278 |
| (/) WACC | 8.6% | 7.1% | 5.6% |
| Enterprise Value | 26,612 | 32,267 | 40,973 |
| (-) Net debt | 9,114 | 9,114 | 9,114 |
| Equity Value | 17,498 | 23,153 | 31,859 |
| (/) Outstanding shares | 577 | 577 | 577 |
| Fair Price | $30.35 | $40.16 | $55.26 |
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.