EPV (Earnings Power Value)

EPV in one sentence

EPV capitalises normalised earnings at the cost of capital. Anything in the market price above EPV is, by definition, what the market is paying for growth.

EPV = Normalised Earnings / Cost of Capital

Why this matters

• Separates today's earnings power from growth optimism.
• Pairs naturally with DCF: DCF gives you total value, EPV gives you the no-growth baseline.
• Useful for cyclicals once you normalise earnings across a full cycle.

EPV in FactorSage

Available as EPV_VALUE (annual, Starter+) and EPV_VALUE_TTM (Pro). A common pattern is to combine EPV with DCF using MIN so the strategy only flags a buy when both models agree the stock is cheap.