Using the Earnings Power Value framework with a WACC of 8.7% and normalized earnings of $943.6M, Rockwell Automation, Inc. has a fair value of $68.15 per share. The EPV range is $53.95 – $88.29 based on WACC sensitivity (7.2% – 10.2%).
| Low | Selected | High | |
|---|---|---|---|
| Normalized Earnings | 944 | 944 | 944 |
| (/) WACC | 10.2% | 8.7% | 7.2% |
| Enterprise Value | 9,280 | 10,887 | 13,165 |
| (-) Net debt | 3,179 | 3,179 | 3,179 |
| Equity Value | 6,101 | 7,708 | 9,986 |
| (/) Outstanding shares | 113 | 113 | 113 |
| Fair Price | $53.95 | $68.15 | $88.29 |
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.