Using the Earnings Power Value framework with a WACC of 8.9% and normalized earnings of $1.1B, Teledyne Technologies Incorporated has a fair value of $204.42 per share. The EPV range is $168.00 – $255.60 based on WACC sensitivity (7.4% – 10.4%).
| Low | Selected | High | |
|---|---|---|---|
| Normalized Earnings | 1,067 | 1,067 | 1,067 |
| (/) WACC | 10.4% | 8.9% | 7.4% |
| Enterprise Value | 10,253 | 11,979 | 14,405 |
| (-) Net debt | 2,290 | 2,290 | 2,290 |
| Equity Value | 7,963 | 9,690 | 12,115 |
| (/) Outstanding shares | 47 | 47 | 47 |
| Fair Price | $168.00 | $204.42 | $255.60 |
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.