Earnings Power Value (EPV): Definition and Simple Calculation
Earnings Power Value (EPV) estimates the value of a business based on sustainable earnings and an appropriate capitalization rate (1/discount rate). It assumes current earnings are sustainable indefinitely (no growth).
Exact formula used in code
In code: taxRate = 0.25; ebitdPerShareTTM is used; WACC is required and validated.
Notes
- More conservative than DCF.
- Works well for mature or cyclical companies where growth is uncertain.