INVESCO DB COMMODITY INDEX TRACKING FUND (DBC): what the price assumes

Generated: 2026-07-25 · Exported: 2026-07-26 · Source: https://boothcheck.com/report/DBC

Headline

Field	Value
Ticker	DBC
Company	INVESCO DB COMMODITY INDEX TRACKING FUND
Sector / Industry	Financial Services
Current price	$30.09/sh

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Field	Value
Inversion basis	whole-company
Must persist for	5.1y
Multiple paid	38x operating income

Solve inputs: computed at a 7.9% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2 years.

Reconcile: at the x-ray's 9.3% required return this reads ~7.9 years; the models below use their own rates.

How unusual the bet is: elevated

Reference	Value
vs own history	+0.13σ
sustained it ~5.1 years at this level	30%
implied end-window share	0%

Valuation X-Ray

The price is supported by asset-based and relative-multiple value, while earnings-power/growth-DCF 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	0.35x	4	justifies
Earnings	2.15x	4	expensive
Relative	0.44x	4	justifies
Growth	2.74x	2	expensive

Families that justify the price: Asset, Relative Families that call it expensive: Earnings, Growth

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=14)

Model	Family	FV	Price/FV	Applicable	Methodology
DCF Perpetual Growth	Growth	$6.70	4.49x	yes	FCF base $0.0B, growth -10% (input: historical growth), terminal g 0.5%, WACC 9.2%, 5yr projection
DCF Exit Multiple	Growth	$30.22	1.00x	yes	Exit EV/EBITDA: 43.6x / 45.6x / 47.6x (bear / base = today's held flat / bull), 5yr
Relative Valuation	Relative	$60.22	0.50x	yes	P/E 9x (blended: static sector reference 12x + trailing (TTM) 5x), scenarios: 7.6x / 9.0x / 10.3x (bear / base = reference held flat / bull), EV/EBITDA N/Ax
Simple DDM	Growth	—	—	no	—
Two-Stage DDM	Growth	—	—	no	—
Simple Excess Return	Asset	$72.34	0.42x	yes	BV/sh $28.91, ROE (TTM) 23.1%, ke 9.3%
Two-Stage Excess Return	Asset	$114.20	0.26x	yes	5yr excess ROE then converge to ke=9.3%
Discounted Future Market Cap	Growth	—	—	no	—
Peter Lynch Fair Value	Relative	$80.29	0.37x	yes	EPS $6.69, growth 1% (input: historical EPS growth), PEG=4.35 (Overvalued)
Margin Trajectory	Growth	—	—	no	—
Earnings Power Value	Earnings	$7.73	3.89x	yes	Normalized EBIT (5y avg op income, one-time charges added back) $0.04B × (1−21%) / WACC 9.2% → EPV (no growth)
Residual Income	Asset	$105.28	0.29x	yes	BV $28.91 + 5yr PV of (ROE (TTM) 23.1% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham Number	Asset	$65.97	0.46x	yes	√(22.5 × EPS $6.69 × BVPS $28.91) — Graham's conservative floor
EV/EBITDA Relative	Relative	—	—	no	—
FCF Yield	Earnings	$6.76	4.45x	yes	FCF $38.0M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF Yield	Earnings	—	—	no	—
Ben Graham Formula	Earnings	$215.90	0.14x	yes	EPS $6.69 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/B	Asset	$1.29	23.33x	yes	BV $28.91 × (ROIC 0.4% / WACC 9.2%) (excluded from median)
P/Sales Sector	Relative	$2.54	11.85x	yes	Revenue $0.05B × sector P/S 3.0x
PEG Fair Value	Relative	$250.91	0.12x	yes	EPS $6.69 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings Yield	Earnings	$72.34	0.42x	yes	EPS $6.69 / 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 cash	$0
Net debt / NOPAT (after-tax)	0.00x
Net debt / operating income (pre-tax)	0.00x
Burning cash	no

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• The basket is weighted by how much of each commodity the world actually produces, spanning energy, precious metals, industrial metals and agriculture, from crude and gold down to lean hogs, cocoa and Kansas wheat.
• The structural cost is the roll: the annual report states plainly that "Rolling in a contangoed market will tend to cause a drag on returns from futures trading", and that drag compounds on top of a management fee of 0.85% a year.
• The tax arithmetic changes from here, because the 20% deduction for qualified publicly traded partnership income applies only to taxable years beginning before January 1, 2026.

Bull Case

The standard objection to a commodity futures fund is the roll, so start there. A futures contract expires. To stay invested you sell the expiring one and buy a later-dated one, and when the later contract costs more than the one you are leaving, the swap loses money every single time you make it. Do that monthly for a decade in the wrong market and the losses swamp whatever the underlying commodities did. The annual report does not soften this: "Rolling in a contangoed market will tend to cause a drag on returns from futures trading."

The response is in the index construction rather than in a promise. Rather than mechanically buying the front month, the index tests contracts across the curve and selects, in the filing's words, the "contract that generates the most favorable implied roll yield under the current market conditions". The filing names the objective directly: the method seeks "to maximize the roll benefits in backwardated markets and to minimize the losses from rolling in" the opposite condition. That does not make contango free. It makes contango a cost the design is actively trying to reduce, which is a different proposition from a fund that rolls into whatever expires next because the calendar said so.

The weighting scheme is the second thing worth understanding, and it is unusually sensible. Weights are set by production: the annual report explains that the index "determines production weights for each eligible commodity based on the total dollar amount of the commodity produced within the year" in proportion to the totals for energy, precious metals, industrial metals and agriculture. A basket built that way tilts toward what the world actually consumes rather than toward whatever futures market happens to be busiest. It also builds in genuine diversification across things that fail for unrelated reasons. Drought does not move copper. Central bank buying does not move lean hogs.

That diversification did visible work in the most recent full year. The fund reported a total return of +8.20% on a market value basis for 2025, and the annual report attributes it to strength in metals outweighing losses in agriculture and energy, with gold advancing to all-time highs on rate-cut expectations, central bank demand and Asian consumer demand. A single-commodity holder had a very different year. A basket weighted across four sectors had a positive one.

There is also a quiet source of return that gets overlooked. Futures require only margin, so most of the fund's assets sit in collateral, held per the filing as "cash, United States Treasury Obligations, T-Bill ETFs and money market mutual funds" with the commodity broker and the custodian. When short rates are meaningful, that collateral earns real interest alongside whatever the commodities do. It is the closest thing this structure has to a coupon, and it arrives whether the basket rises or falls.

Bear Case

The rolling method was the selling point, and it is no longer scarce. When optimized-roll construction was novel it justified paying more than a plain front-month tracker charged. That advantage has been competed down, and the fund's own filing describes the field it now sits in: it "competes with other financial vehicles, including mutual funds, ETFs and other investment companies, other index tracking commodity pools, actively traded commodity pools" and more besides. Investors seeking broad commodity exposure now choose among many vehicles doing structurally similar things, and the differentiator that once earned a premium fee has become a feature of the category.

That matters because the fee is charged against something that produces nothing. The management fee runs at "0.85% per annum of the daily net asset value" of the fund, and the assets it is charged against are futures positions and Treasury bills. A share of an operating company can grow its way past a fee. A barrel of oil cannot. The fee is therefore a certain annual subtraction set against an uncertain commodity return, and over long holding periods it is the only line in the arrangement whose direction is known in advance.

The tax treatment is the erosion nobody notices until April. This is a publicly traded partnership, so a holder receives partnership tax reporting rather than a simple dividend statement, and the filing warns that the fund applies "certain assumptions and conventions in an attempt to comply with applicable rules" that "may not be in compliance with all aspects" of them. On top of that, the annual report notes that the 20% deduction for qualified publicly traded partnership income applies "For taxable years beginning before January 1, 2026". A taxable holder who bought this structure partly for its after-tax profile is holding a different instrument in 2026 than the one they bought, without any change in what the fund does.

Then there is the tail that 2020 taught everyone. The filing states it without euphemism: "If an Index Contract held by the Fund were to reach a negative price, investors in the Fund could lose a significant portion of, or their entire, investment." Physical commodity futures can settle below zero when storage runs out, because at that point the seller must pay someone to take delivery. That is not a market crash risk in the usual sense; it is a plumbing risk specific to holding contracts on things that occupy space.

Underneath all of it is the structural truth a holder should sit with. A commodity earns nothing while you wait. There is no reinvestment, no compounding of retained profit, no management team improving the product. The entire return is the change in what someone else will pay for the same barrel, ounce or bushel, less the roll and less the fee. Over a commodity cycle that can be an excellent trade. Over a long enough holding period with the curve sloped the wrong way, the arithmetic runs quietly against the holder every month.

Valuation

What a holder owns here is a stack of futures contracts and a pile of Treasury bills, and the price of a share tracks the value of that stack. The filing is precise about how the return is assembled: it comes from "the combined return based on the spot prices of Index Commodities and the roll yield from trading Index Contracts". Two inputs, then. What the commodities are worth, and what it costs to keep owning them as contracts expire. Everything else is collateral interest and fees.

That structure explains why the lenses split the way they do. The asset-based and peer-multiple readings sit at or below the current price, while the earnings-power reading lands well above it. For a vehicle whose worth is the holdings themselves rather than a franchise generating recurring profit, the asset lens is the one carrying real information, and the profit-capitalisation lens is describing something the security does not have. The pattern here is a holdings-backed read, not a growth bet, and it should be treated as exactly that.

The subtraction side is knowable in advance, which is unusual and worth using. The management fee is set at "0.85% per annum of the daily net asset value" of the fund. Layered on top is the roll cost when the curve slopes upward, which the index design attempts to reduce but cannot eliminate. Set against those, the collateral earns interest: the fund holds cash, Treasury obligations, T-Bill ETFs and money market funds as margin with its commodity broker and custodian. When short rates sit meaningfully above the fee, collateral income covers the drag and the commodity move is the return. When they do not, the fee and the roll are eating principal before the first barrel moves.

The most recent full year is the cleanest illustration available. The fund reported a total return of +8.20% on a market value basis for 2025, produced by metals offsetting weakness in agriculture and energy, per the annual report. That is what a production-weighted basket is supposed to do, and it is also a reminder of what the price is not: an aggregate bet on inflation, or on any single commodity, but a weighted average of four sectors whose fortunes move for unrelated reasons.

There is no funded debt in the structure to worry about. The fund's obligations are the margin it must post and the fees it must pay, and its assets are the contracts and the collateral behind them. The risk that bounds the downside is therefore not solvency in any corporate sense. It is the market risk of the basket itself, expressed as a daily value-at-risk figure the fund calculates against actual historical movements in its own net assets, and disclosed each year in the annual report. That is the honest frame for what a buyer is taking on: commodity price risk, with a known fee and an uncertain roll, on assets that do not produce cash.

Catalysts

The composition of the basket has shifted in a way worth noting. Refined fuel and crude contracts currently sit at the top of the fund's holdings, ahead of gold, despite the metals sector having been the previous year's standout. Production weighting does that automatically, without a manager making a call, and it means the near-term path of this security is more levered to the energy complex than a headline about record gold prices would suggest. Anyone holding it as a precious-metals proxy is holding something else.

The second item has a date attached and applies to every taxable holder. The 20% deduction for qualified publicly traded partnership income applies "For taxable years beginning before January 1, 2026", per the annual report, which means the after-tax return on this structure changes for the current tax year regardless of what commodities do. For a holder in a taxable account the practical consequence is straightforward: the same pre-tax return now converts into a smaller after-tax one, and the arithmetic of holding this in a taxable account versus a retirement account has moved.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• DBRG (DIGITALBRIDGE GROUP, INC.)
• FY2025 10-K: …credit and hedge funds, REITs, specialty finance companies, commercial and investment banks, commercial finance and insurance companies, publicly traded digital infrastructure companies and other financial institutions. Some of these competitors may have greater financial resources, access to lower cost of capital…
• FY2025 10-K: …risk of loss if we match the prices, structures and terms offered by competitors. This competitive pressure could adversely affect our ability to make successful investments and limit our ability to raise future funds, either of which would adversely impact our business, revenues, results of operations and cash flow.…
• AGM (FEDERAL AGRICULTURAL MORTGAGE CORPORATION)
• FY2025 10-K: …and borrower exposure limits. The relative competitiveness of our loan rates and our ability to develop business with lending institutions are affected by many factors, including: • the overall supply of capital available to agricultural and infrastructure borrowers; • the types and variety of products offered by our…
• FY2025 10-K: …revenue, and margin trends, as well as evaluating the borrower's capital expenditures, customer/subscriber growth, market share, and competition. Any underlying weaknesses are assessed and analyzed in conjunction with any compensating strengths. These loans also typically require ongoing monitoring of reporting…
• CNS (COHEN & STEERS, INC.)
• FY2025 10-K: …in salaries of $2.2 million, partially offset by lower amortization of restricted stock units of $6.3 million. Distribution and service fees expense increased from the year ended December 31, 2024, primarily due to $9.9 million of expenses related to the UTF rights offering and higher average assets under management…
• FY2025 10-K: …through AI capabilities, automation and digital wealth and distribution tools, as well as growing client interest for enhanced digital interaction with their investment portfolios, may require us to adapt our strategy, business and operations to address these trends and pressures. Our competitive position may weaken…
• MKTX (MARKETAXESS HOLDINGS INC.)
• FY2025 10-K: …algorithmic trading solutions businesses compete against market data and information vendors, other approved regulatory reporting businesses and commercial algorithm providers, respectively. 22 Many of our current and potential competitors are more established and substantially larger than we are and have…
• FY2025 10-K: …our platforms or increase their market share, our competitive position and therefore our business, financial condition and results of operations may be materially adversely affected. Our operations also include the sale of pre- and post-trade services, analytics, and market data services. There is a high degree of…
• APAM (Artisan Partners Asset Management Inc.)
• FY2025 10-K: …professionals; • industry trends towards products, strategies, vehicles or services that we do not offer; • competitive conditions in the investment management and broader financial services sectors; and • investor sentiment and confidence. 35 Table of Contents The table below sets forth changes in our total AUM: For…
• FY2025 10-K: …revenues. We invest thoughtfully to support our investment teams and future growth, while also paying out to stockholders and partners a majority of the cash that we generate from operations through dividends and distributions. We expect to continue to invest in the growth of the business, with a focus on adding new…
• SLM (SLM Corp)
• FY2025 10-K: -offs as a percentage of average loans in repayment and delinquencies as a percentage of loans in repayment. Operating Expenses The cost of operating our business directly affects our profitability. We strive to manage growth in our business in a prudent fashion by focusing on investments to improve efficiency and…
• FY2025 10-K: …decrease in our net interest margin and an $79 million decrease in average Private Education Loans and FFELP Loans outstanding. Our net interest margin decreased in 2024 from 2023 primarily because our cost of funds increased more than the yields on our interest-earning assets. As interest rates change, changes in…
• FHI (Federated Hermes, Inc.)
• FY2025 10-K: …human resource management strategies to respond to competition from existing and new market innovations and competitors, which can increase expenses, create risks that such changes will not be successfully implemented, and cause Federated Hermes to not achieve its long-term strategic objectives. Such fee reductions,…
• FY2025 10-K: …uses of treasury stock; Federated Hermes' products, strategies, and other services (as applicable, offerings) and market performance, and Federated Hermes' performance indicators; investor preferences; offering demand, distribution and development and restructuring initiatives and related planning and timing; the…
• AMG (AFFILIATED MANAGERS GROUP, INC.)
• FY2025 10-K: …Affiliates may not, in particular investment strategies such as passively managed products, including ETFs, which typically carry lower 5 Table of Contents fee rates. Certain Affiliates offer their investment management services to the same client types and, from time to time, may compete with each other for clients.…
• FY2025 10-K: …$105.4 billion or 15% driven by a combination of investment performance generated across our Affiliates, net client cash inflows, and the addition of assets associated with new partnerships with Affiliates operating in growing areas within alternative strategies. C lient demand for alternative strategies continued in…

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.

Sources

ETF Trends coverage of broad-commodity funds, July 2026 · Fund Annual Report 2025 on Form 10-K