ConocoPhillips (COP): what the price requires
At today's price, ConocoPhillips (COP) is priced for -4.4% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/COP
Headline
| Field | Value |
|---|---|
| Ticker | COP |
| Company | ConocoPhillips |
| Current price | $112.76/sh |
| Composition | Alaska 12% / Lower 48 88% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 3.7% |
| Operating margin today | 22.5% |
| Margin compression implied | -18.8pp |
| Implied growth | -4.4% |
| Multiple paid | 11x operating income |
The operating-margin requirement is derived from the framework's value band at year 11, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 9% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~5.1pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.58σ |
| cohort percentile (of 45 peers) | 18 |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by earnings-power and growth-DCF value, while asset-based/relative-multiple land below the price. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.57x | 4 | expensive |
| Earnings | 1.23x | 2 | expensive |
| Relative | 1.85x | 3 | expensive |
| Growth | 1.13x | 4 | expensive |
Families that justify the price: Earnings, Growth Families that call it expensive: Asset, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.2%); the inversion above states its own rate.
Per-Model Detail (n=13)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $204.96 | 0.55x | yes | FCF base $18.0B, growth 2% (input: historical growth), terminal g 1.9%, WACC 9.2%, 5yr projection |
| DCF Exit Multiple | Growth | $139.18 | 0.81x | yes | Exit EV/EBITDA: 6.4x / 11.4x / 16.4x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $76.83 | 1.47x | yes | P/E 12.66x (blended: static sector reference 10x + trailing (TTM) 19x), scenarios: 9.5x / 12.7x / 15.2x (bear / base = reference held flat / bull), EV/EBITDA 7.63x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | $15.20 | 7.42x | yes | Stage 1: -25% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $64.62 | 1.74x | yes | BV/sh $52.69, ROE (TTM) 11.3%, ke 9.3% |
| Two-Stage Excess Return | Asset | $71.26 | 1.58x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $77.84 | 1.45x | yes | Rev $58.2B, growth 2% (input: historical growth; tapered), Terminal P/S: 1.8x / 2.4x / 2.8x (bear / base = today's held flat / bull, cap 6x) |
| Growth-Adjusted P/E | Relative | — | — | no | — |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | $72.56 | 1.55x | yes | BV $52.69 + 5yr PV of (ROE (TTM) 11.3% − Kₑ 9.3%) × BV; BV grows 7.4%/yr |
| Graham Number | Asset | $83.63 | 1.35x | yes | √(22.5 × EPS $5.90 × BVPS $52.69) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $61.04 | 1.85x | yes | EBITDA $11.66B × sector EV/EBITDA 6.0x |
| FCF Yield | Earnings | $162.57 | 0.69x | yes | FCF $17976.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $4.94 | 22.82x | yes | EPS $5.90 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | $57.00 | 1.98x | yes | Revenue $58.19B × sector P/S 1.2x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | $63.78 | 1.77x | yes | EPS $5.90 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $15.9b |
| Net debt / NOPAT (after-tax) | 1.78x |
| Net debt / operating income (pre-tax) | 1.15x |
| Share count CAGR (buyback) | -1.6% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
- ConocoPhillips is one of the largest independent exploration and production companies, with the Lower 48 supplying about 88% of its value composition and Alaska the rest. The 2024 Marathon Oil acquisition is now integrated, with run-rate synergies above $1 billion.
- The single most decisive number is the multiple. At $107.74 (as of June 27, 2026) the market pays only about 10x company-wide operating income, a price so low it sits below what even a 5%-a-year operating decline would warrant. The price is pricing in shrinkage.
- The bet that flips the verdict is oil. A low-multiple, cash-returning producer is cheap if commodity prices hold and expensive if they collapse. The 45% cash-return framework, the $0.84 quarterly dividend, and a $2B buyback are the offset; a sustained price slump is the risk.
Bull Case
Anchor on the one number that decides the verdict: the multiple. At $107.74, ConocoPhillips trades at roughly 10x company-wide operating income, a level so low that the price sits below what even a 5%-per-year decline in operating profit would justify. That is the rare case where the market is paying for contraction at a company that is not contracting. Change that multiple back toward a normal level for a low-cost producer and the entire valuation re-rates, with no change in production or prices required.
The asset behind the multiple is high quality. The Lower 48 is the bulk of the business, and Conoco's FY2025 10-K reports that the segment "reported earnings of $5,264 million in 2025, compared with earnings of $5,175 million in" the prior year (accession 0001163165-26-000009), a deep, low-decline inventory of shale acreage. The Marathon Oil acquisition is fully integrated, with the company having "doubled synergy capture to more than $1 billion on a run-rate basis in 2025" and a path to more than $1 billion of incremental cost reductions and margin gains by the end of 2026. Add a $1 billion capital-and-cost reduction targeted for 2026 with flat-to-modest production growth, and the free-cash-flow profile improves even at flat prices.
Capital returns are the mechanism that pays you while you wait for the re-rating. Conoco reaffirmed its framework to return 45% of cash from operations to shareholders, declared a $0.84 quarterly ordinary dividend, and runs a $2 billion buyback that shrinks the share count, with the count already down on a multi-year basis. First-quarter 2026 adjusted earnings were $1.89 per share. For a buyer, the bull case does not require a commodity spike. It requires the market to stop pricing a low-cost, cash-returning major as a melting ice cube, while the dividend and buyback compound the position in the meantime.
Bear Case
Begin the bear case with the qualitative truth before any ratio: ConocoPhillips does not control its own price. It sells a global commodity into a market set by OPEC supply decisions, US shale output, and demand that swings with the economic cycle. The low multiple is not a mistake the market will simply correct; it is the discount equity investors demand for a business whose cash flows can halve in a downturn. The relative-multiple lens already reads the price as expensive against the cleaner peer comparison, near $75 on a blended 12x P/E, which is the market's way of saying the cycle, not the asset, is what it is pricing.
The numbers carry that caution. The earnings-power lens collapses to a tiny figure because the normalized-EBIT calculation runs on a five-year average that includes the depressed years, which is exactly the point: through a full cycle, average earnings are far below the peak the current price seems to lean on. The price-to-sales sector lens lands near $57, and the Ben Graham formula near $5, both reflecting how poorly a cyclical screens on through-cycle metrics. Net debt sits near $15.9B, modest against trailing operating income of about $13.8B, but a commodity slump compresses that operating income fast, and the 45% cash-return promise competes with debt service and maintenance capital when prices fall.
The deeper risk is structural and slow. The energy transition, electric-vehicle adoption, and policy shifts toward decarbonization are a long-duration headwind to oil demand that no single quarter reveals. A producer whose value rests on extracting reserves over decades faces a terminal-value question that a 10x multiple may actually be answering correctly. The dividend and buyback are real, but they are funded by the same volatile cash flow, and Conoco has historically used a variable component that flexes down in weak markets. The bet against this stock is not that the assets are bad. It is that the multiple is low for a reason, and that reason, the price of oil and the long arc of demand, is exactly the variable a buyer cannot control.
Valuation
At $107.74, inverting the price puts ConocoPhillips at roughly 10x company-wide operating income, a multiple low enough that the price sits below what even a 5%-a-year operating decline would warrant. This is a bound rather than a single solved growth rate: the market is paying less than a shrinking business would justify, which for a producer growing production flat-to-modestly is an unusually cautious stance. The near-term pace is within Conoco's recent history; the discount is the cycle premium, not a growth problem.
The model families confirm a value-supported, not growth-dependent, name. The forward-growth lens reaches well above the price, with DCF perpetual growth near $188 and the exit-multiple DCF near $124. The asset lens is constructive too: residual income near $73, two-stage excess return near $71, and the Graham number near $84. The earnings-power FCF-yield capitalization lands near $163 on trailing free cash flow. The one lens that says expensive is the relative-multiple view near $75, which is the market applying a cyclical discount. The blended X-ray near $73 is dragged down by the through-cycle earnings-power figures that average in the weak years.
The valuation reads as cheap on cash flow and assets, full only on the cyclical-discount lens, and the whole thing pivots on oil. If commodity prices hold near current levels, the cash-flow and asset methods are right and the stock is undervalued. If prices fall hard, the through-cycle methods are right and today's earnings are a peak. The deciding variable is the oil price and the long-run demand arc, not company execution.
Catalysts
The 2026 cost-and-capital program is the controllable catalyst. Management is targeting a $1 billion reduction in capital and costs in 2026 with flat-to-modest production growth, plus more than $1 billion of incremental Marathon synergies and margin gains on a run-rate basis by year-end. Evidence in upcoming prints that those savings are landing would lift free cash flow independent of oil prices.
Capital returns set the floor and the cadence. Conoco reaffirmed its 45% cash-from-operations return framework, declared a $0.84 quarterly dividend, and runs a $2 billion buyback adjusted quarter to quarter. The dividend is intended to grow competitively, so a dividend increase or buyback acceleration is the most direct near-term signal of management confidence.
The overriding variable is the commodity. Quarterly realized prices for crude, natural gas, and NGLs drive the cash flow that funds everything else, so the next earnings reports and the prevailing oil price are the cleanest read on the thesis. First-quarter 2026 adjusted EPS was $1.89. Watch for production volumes versus the flat-to-modest guide, unit cost trends, and any change to the cash-return mix as prices move.
Sources: ConocoPhillips Q4/FY2025 results and 2026 guidance (ConocoPhillips), COP Q1 2026 earnings call (Alpha Spread), ConocoPhillips (Simply Wall St)
Peer Cohorts (Per Segment, With Filing Citations)
Alaska / Lower 48 (reported)
- EOG (EOG RESOURCES, INC.)
- (no filing in the citation store)
- OXY (OCCIDENTAL PETROLEUM CORPORATION)
- (no filing in the citation store)
- DVN (DEVON ENERGY CORP/DE)
- (no filing in the citation store)
- XOM (Exxon Mobil Corporation)
- (no filing in the citation store)
- CVX (Chevron Corp)
- (no filing in the citation store)
- IMO (IMPERIAL OIL LIMITED)
- (no filing in the citation store)
- SU (SUNCOR ENERGY INC)
- (no filing in the citation store)
- EQNR (EQUINOR ASA)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.