EVA · Economic Value Added valuation
Splits enterprise value into invested capital plus the present value of future economic profit (NOPAT minus a WACC-based capital charge); growth adds value only when returns exceed the cost of capital.
- Guide level
- Practical
- Output
- Intrinsic value
Core formula
Enterprise value = invested capital + Σ (NOPAT − WACC × invested capital) / (1 + WACC)ᵗHow to interpret it
Splits enterprise value into invested capital plus the present value of future economic profit (NOPAT minus a WACC-based capital charge); growth adds value only when returns exceed the cost of capital.
The output should be read as a scenario or decision aid, not as a guaranteed price target. Compare it with at least one method based on different economic assumptions.
Practical workflow
- Normalize the latest public financial and operating data.
- Choose assumptions that match the company's economics and accounting structure.
- Calculate conservative, base and optimistic cases where the method permits.
- Compare the result with market pricing and an independent valuation method.
- Document the assumptions that drive the largest changes in value.
Key limitation
Results depend heavily on invested-capital adjustments; not for financials or loss-making companies.
How Stockinsky uses it
Stockinsky uses this framework only when the company type and available data support it. Professional valuations expose assumptions, sources and warnings instead of presenting false precision.