Using the Earnings Power Value framework with a WACC of 7.4% and normalized earnings of $3.2B, Willis Towers Watson Public Limited Company has a fair value of $397.28 per share. The EPV range is $323.74 – $508.34 based on WACC sensitivity (5.9% – 8.9%).
| Low | Selected | High | |
|---|---|---|---|
| Normalized Earnings | 3,181 | 3,181 | 3,181 |
| (/) WACC | 8.9% | 7.4% | 5.9% |
| Enterprise Value | 35,821 | 43,102 | 54,097 |
| (-) Net debt | 3,771 | 3,771 | 3,771 |
| Equity Value | 32,050 | 39,331 | 50,326 |
| (/) Outstanding shares | 99 | 99 | 99 |
| Fair Price | $323.74 | $397.28 | $508.34 |
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.