Using the Earnings Power Value framework with a WACC of 6.7% and normalized earnings of $2.0B, Vistra Corp. has a fair value of $29.01 per share. The EPV range is $13.08 – $54.21 based on WACC sensitivity (5.2% – 8.2%).
| Low | Selected | High | |
|---|---|---|---|
| Normalized Earnings | 1,959 | 1,959 | 1,959 |
| (/) WACC | 8.2% | 6.7% | 5.2% |
| Enterprise Value | 24,023 | 29,437 | 38,000 |
| (-) Net debt | 19,579 | 19,579 | 19,579 |
| Equity Value | 4,444 | 9,858 | 18,421 |
| (/) Outstanding shares | 340 | 340 | 340 |
| Fair Price | $13.08 | $29.01 | $54.21 |
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.