Using the Earnings Power Value framework with a WACC of 11.3% and normalized earnings of $10.3B, Truist Financial Corporation has a fair value of $45.09 per share. The EPV range is $36.73 – $56.02 based on WACC sensitivity (9.8% – 12.8%).
| Low | Selected | High | |
|---|---|---|---|
| Normalized Earnings | 10,286 | 10,286 | 10,286 |
| (/) WACC | 12.8% | 11.3% | 9.8% |
| Enterprise Value | 80,626 | 91,369 | 105,414 |
| (-) Net debt | 33,425 | 33,425 | 33,425 |
| Equity Value | 47,201 | 57,944 | 71,989 |
| (/) Outstanding shares | 1,285 | 1,285 | 1,285 |
| Fair Price | $36.73 | $45.09 | $56.02 |
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.