Using the Earnings Power Value framework with a WACC of 7.6% and normalized earnings of $10.1B, Novo Nordisk A/S has a fair value of $26.56 per share. The EPV range is $21.61 – $33.96 based on WACC sensitivity (6.1% – 9.1%).
| Low | Selected | High | |
|---|---|---|---|
| Normalized Earnings | 10,101 | 10,101 | 10,101 |
| (/) WACC | 9.1% | 7.6% | 6.1% |
| Enterprise Value | 111,264 | 133,288 | 166,181 |
| (-) Net debt | 15,152 | 15,152 | 15,152 |
| Equity Value | 96,113 | 118,136 | 151,029 |
| (/) Outstanding shares | 4,448 | 4,448 | 4,448 |
| Fair Price | $21.61 | $26.56 | $33.96 |
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.