Using the Earnings Power Value framework with a WACC of 6.3% and normalized earnings of $1.5B, SBA Communications Corporation has a fair value of $84.83 per share. The EPV range is $41.84 – $154.73 based on WACC sensitivity (4.8% – 7.8%).
| Low | Selected | High | |
|---|---|---|---|
| Normalized Earnings | 1,510 | 1,510 | 1,510 |
| (/) WACC | 7.8% | 6.3% | 4.8% |
| Enterprise Value | 19,386 | 24,009 | 31,525 |
| (-) Net debt | 14,887 | 14,887 | 14,887 |
| Equity Value | 4,499 | 9,122 | 16,639 |
| (/) Outstanding shares | 108 | 108 | 108 |
| Fair Price | $41.84 | $84.83 | $154.73 |
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.