DCF Studio

    COP · NYQ · Energy

    ConocoPhillips

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 95.03

    Market price

    USD 131.83

    Implied upside

    -27.9%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Value Per Share

    Perpetuity growth
    USD 95.03-27.9%
    Exit multiple
    USD 78.46-40.5%
    Market price
    USD 131.83

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn4bn8bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 53.6bnUSD 48.7bnUSD 44.3bnUSD 40.2bnUSD 36.6bn-9.1%
    EBITUSD 13.6bnUSD 12.4bnUSD 11.3bnUSD 10.2bnUSD 9.3bn-9.1%
    NOPATUSD 10.8bnUSD 9.8bnUSD 8.9bnUSD 8.1bnUSD 7.4bn-9.1%
    Add depreciation & amortisationUSD 8.2bnUSD 7.5bnUSD 6.8bnUSD 6.2bnUSD 5.6bn-9.1%
    Less capital expenditureUSD -10.2bnUSD -9.3bnUSD -8.5bnUSD -7.7bnUSD -7.0bn-9.1%
    Less increase in working capitalUSD -331.9mUSD -301.6mUSD -274.2mUSD -249.2mUSD -226.5m-9.1%
    Free cashflow to firmUSD 8.4bnUSD 7.7bnUSD 7.0bnUSD 6.3bnUSD 5.7bn-9.1%
    Discount factor0.96720.90490.84650.79200.7409-
    Present valueUSD 8.1bnUSD 6.9bnUSD 5.9bnUSD 5.0bnUSD 4.3bn-15.0%
    Present Value Of The ForecastUSD 30.2bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.420Reported 0.134, pulled toward 1.0 (Blume)
    Cost of equity7.31%Risk-free + beta x equity risk premium
    Cost of debt5.16%Interest expense / average total debt
    Market capitalisationUSD 158.4bn87.1% of capital
    Total debtUSD 23.4bn12.9% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC6.89%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 95.03

    78% of EV

    Forecast FCFF, final year
    USD 5.7bn
    Capex at depreciation, working capital in reinvestment
    USD 7.4bn
    Less reinvestment at g/ROIC (17.2% of NOPAT)
    USD -1.3bn
    Capitalised
    USD 6.1bn
    ROIC (reported)
    14.6%
    Terminal value, undiscounted
    USD 142.2bn
    Terminal value, discounted
    USD 105.4bn
    Enterprise value
    USD 135.6bn
    Less net debt
    USD 16.5bn
    Equity value
    USD 119.1bn

    Exit at 7.7x EBITDA

    Value per shareUSD 78.46

    74% of EV

    Terminal value, undiscounted
    USD 114.2bn
    Terminal value, discounted
    USD 84.6bn
    Enterprise value
    USD 114.8bn
    Less net debt
    USD 16.5bn
    Equity value
    USD 98.3bn

    Spread between methods: 19%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    4.89%139.06156.05180.07216.71279.59
    5.89%105.50114.03125.03139.77160.63
    6.89%84.3989.1895.03102.35111.78
    7.89%69.8872.7676.1580.2085.15
    8.89%59.2961.0963.1665.5568.36

    Outlined: this model. Green text: above today's price of 131.83. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year-9.1%-3.1%+6.0pp
    EBIT margin25.4%33.6%+8.2pp
    Discount rate6.9%5.7%-1.2pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.