Using the Earnings Power Value framework with a WACC of 7.3% and normalized earnings of $2.9B, Public Storage has a fair value of $166.62 per share. The EPV range is $128.46 – $224.62 based on WACC sensitivity (5.8% – 8.8%).
| Low | Selected | High | |
|---|---|---|---|
| Normalized Earnings | 2,853 | 2,853 | 2,853 |
| (/) WACC | 8.8% | 7.3% | 5.8% |
| Enterprise Value | 32,532 | 39,244 | 49,446 |
| (-) Net debt | 9,936 | 9,936 | 9,936 |
| Equity Value | 22,596 | 29,309 | 39,510 |
| (/) Outstanding shares | 176 | 176 | 176 |
| Fair Price | $128.46 | $166.62 | $224.62 |
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.