DCF Studio

    PSX · NYQ · Energy

    Phillips 66

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 30.34

    Market price

    USD 273.13

    Implied upside

    -88.9%

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

    Value Per Share

    Perpetuity growth
    USD 30.34-88.9%
    Exit multiple
    USD 128.76-52.9%
    Market price
    USD 273.13

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn3bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 121.8bnUSD 112.0bnUSD 103.1bnUSD 94.8bnUSD 87.3bn-8.0%
    EBITUSD 4.5bnUSD 4.2bnUSD 3.8bnUSD 3.5bnUSD 3.2bn-8.0%
    NOPATUSD 3.6bnUSD 3.3bnUSD 3.0bnUSD 2.8bnUSD 2.6bn-8.0%
    Add depreciation & amortisationUSD 2.0bnUSD 1.8bnUSD 1.7bnUSD 1.5bnUSD 1.4bn-8.0%
    Less capital expenditureUSD -1.7bnUSD -1.6bnUSD -1.4bnUSD -1.3bnUSD -1.2bn-8.0%
    Less increase in working capitalUSD -1.2bnUSD -1.1bnUSD -982.1mUSD -903.5mUSD -831.3m-8.0%
    Free cashflow to firmUSD 2.7bnUSD 2.5bnUSD 2.3bnUSD 2.1bnUSD 1.9bn-8.0%
    Discount factor0.95940.88320.81300.74840.6889-
    Present valueUSD 2.6bnUSD 2.2bnUSD 1.9bnUSD 1.6bnUSD 1.3bn-15.3%
    Present Value Of The ForecastUSD 9.5bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.802Reported 0.704, pulled toward 1.0 (Blume)
    Cost of equity9.41%Risk-free + beta x equity risk premium
    Cost of debt5.46%Interest expense / average total debt
    Market capitalisationUSD 109.5bn84.7% of capital
    Total debtUSD 19.7bn15.3% of capital, book value as a proxy
    Tax rate20.4%Effective, capped at statutory
    WACC8.63%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 30.34

    69% of EV

    Forecast FCFF, final year
    USD 1.9bn
    Capex at depreciation, working capital in reinvestment
    USD 2.6bn
    Less reinvestment at g/ROIC (27.5% of NOPAT)
    USD -707.8m
    Capitalised
    USD 1.9bn
    ROIC (reported)
    9.1%
    Terminal value, undiscounted
    USD 31.2bn
    Terminal value, discounted
    USD 21.5bn
    Enterprise value
    USD 31.0bn
    Less net debt
    USD 18.6bn
    Equity value
    USD 12.4bn

    Exit at 19.3x EBITDA

    Value per shareUSD 128.76

    87% of EV

    Terminal value, undiscounted
    USD 89.5bn
    Terminal value, discounted
    USD 61.6bn
    Enterprise value
    USD 71.1bn
    Less net debt
    USD 18.6bn
    Equity value
    USD 52.5bn

    Spread between methods: 124%.

    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%
    6.63%56.6459.7663.5668.3574.57
    7.63%40.7642.1343.7345.6247.90
    8.63%29.3229.8130.3430.9231.56
    9.63%21.1821.4021.6121.8322.05
    10.63%15.0215.2115.4015.5815.77

    Outlined: this model. Green text: above today's price of 273.13. 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-8.0%20.4%+28.4pp
    EBIT margin3.7%14.5%+10.7pp
    Discount rate8.6%3.8%-4.8pp
    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.