Using the Earnings Power Value framework with a WACC of 6.8% and normalized earnings of $20.8B, T-Mobile US, Inc. has a fair value of $166.41 per share. The EPV range is $117.78 – $242.50 based on WACC sensitivity (5.3% – 8.3%).
| Low | Selected | High | |
|---|---|---|---|
| Normalized Earnings | 20,777 | 20,777 | 20,777 |
| (/) WACC | 8.3% | 6.8% | 5.3% |
| Enterprise Value | 249,891 | 304,898 | 390,957 |
| (-) Net debt | 116,671 | 116,671 | 116,671 |
| Equity Value | 133,220 | 188,227 | 274,286 |
| (/) Outstanding shares | 1,131 | 1,131 | 1,131 |
| Fair Price | $117.78 | $166.41 | $242.50 |
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.