Using the Earnings Power Value framework with a WACC of 6.9% and normalized earnings of $885.5M, Regency Centers Corporation has a fair value of $38.36 per share. The EPV range is $25.84 – $57.84 based on WACC sensitivity (5.4% – 8.4%).
| Low | Selected | High | |
|---|---|---|---|
| Normalized Earnings | 886 | 886 | 886 |
| (/) WACC | 8.4% | 6.9% | 5.4% |
| Enterprise Value | 10,524 | 12,808 | 16,356 |
| (-) Net debt | 5,816 | 5,816 | 5,816 |
| Equity Value | 4,708 | 6,991 | 10,540 |
| (/) Outstanding shares | 182 | 182 | 182 |
| Fair Price | $25.84 | $38.36 | $57.84 |
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.