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    CVX · NYQ · Energy

    Chevron Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 74.46

    Market price

    USD 209.51

    Implied upside

    -64.5%

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

    Value Per Share

    Perpetuity growth
    USD 74.46-64.5%
    Exit multiple
    USD 131.73-37.1%
    Market price
    USD 209.51

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn8bn17bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 169.9bnUSD 156.6bnUSD 144.3bnUSD 133.0bnUSD 122.5bn-7.9%
    EBITUSD 20.9bnUSD 19.2bnUSD 17.7bnUSD 16.3bnUSD 15.0bn-7.9%
    NOPATUSD 16.5bnUSD 15.2bnUSD 14.0bnUSD 12.9bnUSD 11.9bn-7.9%
    Add depreciation & amortisationUSD 14.8bnUSD 13.7bnUSD 12.6bnUSD 11.6bnUSD 10.7bn-7.9%
    Less capital expenditureUSD -13.2bnUSD -12.1bnUSD -11.2bnUSD -10.3bnUSD -9.5bn-7.9%
    Less increase in working capitalUSD -1.2bnUSD -1.1bnUSD -1.1bnUSD -973.9mUSD -897.5m-7.9%
    Free cashflow to firmUSD 16.9bnUSD 15.6bnUSD 14.3bnUSD 13.2bnUSD 12.2bn-7.9%
    Discount factor0.96140.88850.82120.75890.7014-
    Present valueUSD 16.2bnUSD 13.8bnUSD 11.8bnUSD 10.0bnUSD 8.5bn-14.8%
    Present Value Of The ForecastUSD 60.4bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.659Reported 0.491, pulled toward 1.0 (Blume)
    Cost of equity8.62%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 411.0bn91.0% of capital
    Total debtUSD 40.8bn9.0% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC8.20%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 74.46

    65% of EV

    Forecast FCFF, final year
    USD 12.2bn
    Capex at depreciation, working capital in reinvestment
    USD 11.9bn
    Less reinvestment at g/ROIC (25.1% of NOPAT)
    USD -3.0bn
    Capitalised
    USD 8.9bn
    ROIC (reported)
    10.0%
    Terminal value, undiscounted
    USD 160.0bn
    Terminal value, discounted
    USD 112.2bn
    Enterprise value
    USD 172.6bn
    Less net debt
    USD 34.5bn
    Equity value
    USD 138.2bn

    Exit at 12.1x EBITDA

    Value per shareUSD 131.73

    78% of EV

    Terminal value, undiscounted
    USD 311.5bn
    Terminal value, discounted
    USD 218.5bn
    Enterprise value
    USD 278.9bn
    Less net debt
    USD 34.5bn
    Equity value
    USD 244.4bn

    Spread between methods: 56%.

    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%
    6.20%104.92110.12116.66125.17136.73
    7.20%85.4688.0491.1294.8799.58
    8.20%71.7673.0274.4676.1378.11
    9.20%61.5762.1162.7063.3564.07
    10.20%53.8754.0754.2754.4854.68

    Outlined: this model. Green text: above today's price of 209.51. 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-7.9%12.1%+20.0pp
    EBIT margin12.3%30.2%+18.0pp
    Discount rate8.2%4.6%-3.6pp
    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.