DCF Studio

    FANG · NMS · Energy

    Diamondback Energy, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 229.89

    Market price

    USD 199.74

    Implied upside

    +15.1%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.
    AdjustedCapital expenditure runs at 66.2% of revenue against depreciation of 23.6%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Value Per Share

    Perpetuity growth
    USD 229.89+15.1%
    Exit multiple
    USD 163.52-18.1%
    Market price
    USD 199.74

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    -1bn2bn5bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 19.9bnUSD 18.8bnUSD 17.9bnUSD 17.3bnUSD 16.9bnUSD 16.7bnUSD 16.6bnUSD 16.7bnUSD 16.9bnUSD 17.3bn-1.5%
    EBITUSD 9.7bnUSD 9.2bnUSD 8.8bnUSD 8.5bnUSD 8.3bnUSD 8.2bnUSD 8.1bnUSD 8.2bnUSD 8.3bnUSD 8.5bn-1.5%
    NOPATUSD 7.9bnUSD 7.4bnUSD 7.1bnUSD 6.9bnUSD 6.7bnUSD 6.6bnUSD 6.6bnUSD 6.6bnUSD 6.7bnUSD 6.9bn-1.5%
    Add depreciation & amortisationUSD 4.7bnUSD 4.4bnUSD 4.2bnUSD 4.1bnUSD 4.0bnUSD 3.9bnUSD 3.9bnUSD 3.9bnUSD 4.0bnUSD 4.1bn-1.5%
    Less capital expenditureUSD -13.1bnUSD -11.7bnUSD -10.5bnUSD -9.5bnUSD -8.6bnUSD -7.9bnUSD -7.2bnUSD -6.6bnUSD -6.1bnUSD -5.6bn-9.1%
    Capex, % of revenue66.2%62.4%58.6%54.8%51.0%47.2%43.4%39.6%35.8%32.0%-
    Less increase in working capitalUSD -339.7mUSD 74.2mUSD 57.4mUSD 42.6mUSD 29.3mUSD 17.0mUSD 5.4mUSD -6.0mUSD -17.4mUSD -29.2m-23.9%
    Free cashflow to firmUSD -917.8mUSD 239.3mUSD 895.5mUSD 1.5bnUSD 2.1bnUSD 2.7bnUSD 3.3bnUSD 3.9bnUSD 4.6bnUSD 5.4bn-
    Discount factor0.96710.90460.84610.79130.74010.69230.64750.60560.56640.5298-
    Present valueUSD -887.6mUSD 216.5mUSD 757.6mUSD 1.2bnUSD 1.6bnUSD 1.9bnUSD 2.1bnUSD 2.4bnUSD 2.6bnUSD 2.9bn-
    Present Value Of The ForecastUSD 14.7bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.644Reported 0.468, pulled toward 1.0 (Blume)
    Cost of equity7.62%Risk-free + beta x equity risk premium
    Cost of debt5.29%Risk-free + 40bp, the spread for a AAA rating at 18.6x interest cover. Book interest / average debt was lower, at 1.9%.
    Market capitalisationUSD 55.9bn79.0% of capital
    Total debtUSD 14.9bn21.0% of capital, book value as a proxy
    Tax rate19.1%Effective, capped at statutory
    WACC6.92%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 229.89

    82% of EV

    Forecast FCFF, final year
    USD 5.4bn
    Capex at depreciation, working capital in reinvestment
    USD 6.9bn
    Less reinvestment at g/ROIC (21.2% of NOPAT)
    USD -1.5bn
    Capitalised
    USD 5.4bn
    ROIC (reported)
    11.8%
    Terminal value, undiscounted
    USD 125.6bn
    Terminal value, discounted
    USD 66.6bn
    Enterprise value
    USD 81.2bn
    Less net debt
    USD 14.8bn
    Equity value
    USD 66.5bn

    Exit at 7.1x EBITDA

    Value per shareUSD 163.52

    76% of EV

    Terminal value, undiscounted
    USD 89.4bn
    Terminal value, discounted
    USD 47.4bn
    Enterprise value
    USD 62.0bn
    Less net debt
    USD 14.8bn
    Equity value
    USD 47.3bn

    Spread between methods: 34%.

    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%
    4.92%404.65448.00510.51607.19774.23
    5.92%285.95304.20328.60362.33411.17
    6.92%211.84219.68229.89243.38261.59
    7.92%161.44164.35168.25173.46180.40
    8.92%125.10125.49126.30127.65129.68

    Outlined: this model. Green text: above today's price of 199.74. 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.

    InputActualModelImplied
    Revenue growth, a year16.0%1.5%0.3%
    EBIT margin68.2%49.0%45.2%
    Discount rate-6.9%7.4%
    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.