Using the Earnings Power Value framework with a WACC of 8.8% and normalized earnings of $10.5B, QUALCOMM Incorporated has a fair value of $100.96 per share. The EPV range is $85.07 – $123.41 based on WACC sensitivity (7.3% – 10.3%).
| Low | Selected | High | |
|---|---|---|---|
| Normalized Earnings | 10,522 | 10,522 | 10,522 |
| (/) WACC | 10.3% | 8.8% | 7.3% |
| Enterprise Value | 102,538 | 120,091 | 144,897 |
| (-) Net debt | 8,530 | 8,530 | 8,530 |
| Equity Value | 94,008 | 111,561 | 136,367 |
| (/) Outstanding shares | 1,105 | 1,105 | 1,105 |
| Fair Price | $85.07 | $100.96 | $123.41 |
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.