Earnings Power Value - EPV

AAA

DEFINITION of 'Earnings Power Value - EPV'

A technique for valuing stocks by making an assumption about the sustainability of current earnings and the cost of capital but assuming no further growth. Earnings power value (EPV) is a specific formula: Adjusted Earnings / Cost of Capital. While the formula is simple, finding the adjusted earnings can be difficult and must consider operating earnings, taxation adjustments, depreciation and more.

INVESTOPEDIA EXPLAINS 'Earnings Power Value - EPV'

EPV was developed by Columbia University Professor Bruce Greenwald. One of the ways that it helps investors evaluate the intrinsic value of a position is by removing the difficulties of other evaluation formulas. However, that can mean that EPV is less accurate than other, more thorough methods. EPV does give a clear look at a company's present situation though.

RELATED TERMS
  1. Capital

    1) Financial assets or the financial value of assets, such as ...
  2. Quantitative Analysis

    A business or financial analysis technique that seeks to understand ...
  3. Valuation Analysis

    A form of fundamental analysis that looks to compare the valuation ...
  4. Valuation

    The process of determining the current worth of an asset or company. ...
  5. Fundamental Analysis

    A method of evaluating a security that entails attempting to ...
  6. Appraised Equity Capital

    The excess of the market value of an asset over its book value. ...
Related Articles
  1. Trading Strategies

    How do traders interpret a Downside Tusuki Gap pattern?

    Understand the logic and rational behind a downside Tasuki gap candlestick pattern, which traders look to as a bearish continuation signal.
  2. Fundamental Analysis

    What is the difference between enterprise value and equity value?

    Valuating a business accurately depends heavily on the purpose of the valuation. Learn how enterprise value and equity value can help clarify valuations.
  3. Retirement

    Technical Top-Down Investing: Analyzing The Market

    The top-down investment strategy depends on economy and market strength. Find out what you should know before jumping in.
  4. Investing

    How To Analyze Restaurant Stocks

    Don't put your money on the table before getting a taste for analyzing this sector.
  5. Active Trading

    Tales From The Trenches: Location Is Everything

    When a candle pattern re-occurs near a moving average, it may indicate future support or resistance.
  6. Investing

    How do I take qualitative factors into consideration when using fundamental analysis?

    Fundamental analysis is the method of analyzing companies based on factors that affect their intrinsic value. There are two sides to this method: the quantitative and the qualitative. The quantitative ...
  7. Fundamental Analysis

    Discounted Cash Flow Analysis

    Find out how analysts determine the fair value of a company with this step-by-step tutorial and learn how to evaluate an investment's attractiveness for yourself.
  8. Investing Basics

    Get Organized With An Investment Analysis Form

    Your research will be easy if you compile all the decision-making information you need.
  9. Active Trading

    Would You Profit As A Day Trader?

    Market timing is surrounded by controversy, but does it work?
  10. Active Trading Fundamentals

    Simple Moving Averages Make Trends Stand Out

    The moving average is easy to calculate and, once plotted on a chart, is a powerful visual trend-spotting tool.

You May Also Like

Hot Definitions
  1. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  2. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  3. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  4. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  5. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
  6. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
Trading Center