DT Midstream, Inc. (DTM): what the price requires

At today's price, DT Midstream, Inc. (DTM) is priced for +18.7% 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/DTM

Headline

FieldValue
TickerDTM
CompanyDT Midstream, Inc.
Current price$146.60/sh
CompositionPipeline 55% / Gathering 45%

What The Price Requires (Inversion)

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

FieldValue
Inversion basiswhole-company
Operating margin needed15.2%
Operating margin today49.4%
Margin compression implied-34.2pp
Implied growth18.7%
Multiple paid27x operating income

The operating-margin requirement is derived from the framework's value band at year 10, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 8.3% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~8pp.

How unusual the bet is: within-range

ReferenceValue
vs own history+0.26σ
cohort percentile (of 70 peers)79
sustained it ~5 years at this level42%
implied end-window share0%

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

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.

FamilyMedian price/FVModelsReads
Asset2.93x5expensive
Earnings7.84x5expensive
Relative1.33x5expensive
Growth0.68x3justifies

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

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.7%); the inversion above states its own rate.

Per-Model Detail (n=18)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$309.130.47xyesFCF base $0.7B, growth 23% (input: historical growth), terminal g 4.0%, WACC 7.7%, 7yr projection
DCF Exit MultipleGrowth$214.590.68xyesExit EV/EBITDA: 18.4x / 20.4x / 22.4x (bear / base = today's held flat / bull), 7yr
Relative ValuationRelative$114.981.28xyesP/E 23.76x (blended: static sector reference 20x + trailing (TTM) 33x), scenarios: 19.2x / 23.8x / 28.3x (bear / base = reference held flat / bull), EV/EBITDA 15.22x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$48.743.01xyesBV/sh $46.28, ROE (TTM) 9.7%, ke 9.3%
Two-Stage Excess ReturnAsset$49.992.93xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$177.680.83xyesRev $1.3B, growth 23% (input: historical growth; tapered), Terminal P/S: 9.5x / 11.8x / 14.1x (bear / base = today's held flat / bull, cap 12x)
Peter Lynch Fair ValueRelative$110.571.33xyesEPS $4.51, growth 25% (input: historical EPS growth), PEG=1.33 (Fair)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$18.697.84xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.50B × (1−21%) / WACC 7.7% → EPV (no growth)
Residual IncomeAsset$50.212.92xyesBV $46.28 + 5yr PV of (ROE (TTM) 9.7% − Kₑ 9.3%) × BV; BV grows 6.3%/yr
Graham NumberAsset$68.532.14xyes√(22.5 × EPS $4.51 × BVPS $46.28) — Graham's conservative floor
EV/EBITDA RelativeRelative$82.051.79xyesEBITDA $0.90B × sector EV/EBITDA 13.0x
FCF YieldEarnings$17.808.24xyesFCF $467.0M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$15.069.73xyesSBC-adj FCF $0.44B (FCF $0.47B − SBC $0.03B) capitalized at Kₑ
Ben Graham FormulaEarnings$145.521.01xyesEPS $4.51 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$9.8314.91xyesBV $46.28 × (ROIC 1.6% / WACC 7.7%)
P/Sales SectorRelative$31.064.72xyesRevenue $1.28B × sector P/S 2.5x
PEG Fair ValueRelative$165.850.88xyesEPS $4.51 × (PEG 1.5 × growth 24.5% (input: historical EPS growth)) → PE 36.8x
Earnings YieldEarnings$48.763.01xyesEPS $4.51 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$3.2b
Net debt / NOPAT (after-tax)6.51x
Net debt / operating income (pre-tax)5.13x
Interest coverage3.9x
Share count CAGR (dilution)1.4%
Burning cashno

Bullet Takeaways

DT Midstream is a contracted gas pipeline and gathering operator (roughly 49.5% operating margin) stepping into a growth phase, with a $3.4 billion project backlog and approved expansions funded by about $400 million of 2026 and $440 million of 2027 committed capital.

Q1 2026 beat expectations (operating EPS $1.27 versus $1.16, revenue up 10.9% to $336 million, adjusted EBITDA $308 million, distributable cash flow of $274 million), and the stock rose about 9.5% on the print, though management cautioned the quarter was seasonally strong.

The price embeds an aggressive roughly 17.9% implied operating-growth pace, with only the growth-DCF methods reaching the $143.26 price, so it leans on the data-center and power-plant demand converting against regulatory, gas-price, and interest-rate risks outside the company's control.

Bull Case

DT Midstream looks like a mature, steady infrastructure company on the surface, but the right frame is a maturing midstream stepping into a growth phase, and the distinction is the whole bull case. The base business is exactly what you want in an infrastructure name: pipelines that transport and store natural gas and gathering systems that collect gas at the wellhead for delivery to plants and pipelines [DTM FY2025 10-K, accession 0001842022-26-000003], with revenue earned on contracted services rather than commodity speculation [DTM FY2025 10-K, accession 0001842022-26-000003]. That contracted base produces a roughly 49.5% operating margin, the signature of a toll-road asset. What is changing is the demand side: gas-fired power and data centers are creating new, durable volume that a mature pipeline operator does not usually get.

The Q1 2026 print showed the model working and the growth arriving at once. Operating EPS of $1.27 beat the $1.16 estimate, revenue rose 10.9% to $336 million, adjusted EBITDA reached $308 million, and distributable cash flow surged to $274 million. More important than the quarter is the backlog: management detailed a $3.4 billion growth project pipeline and approved two expansions (the Vector mainline adding roughly 400 MMcf/d and Millennium R2R adding 70 MMcf/d), raising committed capital to about $400 million in 2026 and $440 million in 2027. This is a company funding identifiable, contracted growth, not chasing speculative volume.

The demand drivers are the most attractive part. Commercial momentum includes a contingent 20-year, 265 MMcf/d power-plant lateral, a 250 MMcf/d NEXUS interconnect serving a data center, oversubscribed open seasons for Midwestern and Vector expansions, and the LEAP system operating at 2.1 Bcf/d with potential to expand toward 4 Bcf/d. Long-dated, take-or-pay-style contracts tied to power generation and data-center load are exactly the kind of demand that gives a midstream operator multi-year earnings visibility. A pipeline business with a 49.5% margin, a $3.4 billion contracted backlog, and data-center demand pulling on its capacity is positioned to compound from here, which is why only the growth-oriented valuation methods reach the price.

Bear Case

The variable with the most leverage over DT Midstream is regulatory and macro exposure, and the current price does not leave much room for it to turn. Interstate gas pipelines operate under FERC oversight, where rates, expansion approvals, and tariff structures are set by a regulator and contested by shippers and intervenors. Every one of the growth projects in the $3.4 billion backlog (the Vector expansion, Millennium R2R, the power-plant lateral, the data-center interconnect) ultimately needs permitting and regulatory clearance, and pipeline approvals have become slower and more litigated. A delayed or denied expansion does not just lose a project; it strands the capital already committed against it.

The macro sensitivity sits underneath the contracts. The gathering business, which is about 45% of the mix, is tied to upstream drilling activity in the basins DT serves, and that activity tracks natural gas prices. When gas prices fall and producers slow drilling, gathering volumes soften regardless of how well the pipeline segment is contracted. The interest-rate environment is the other macro lever: midstream is a capital-intensive, yield-oriented sector, so higher rates raise both the cost of the debt funding the $3.4 billion build-out (against roughly $3.25 billion of existing net debt) and the discount rate the market applies to the distributions, which can compress the multiple even if the business executes.

The valuation reflects how much good news is already in the price. The inversion reads the priced-in assumption as within range but implies roughly 17.9% operating-profit growth, an aggressive pace for an infrastructure asset, and the static methods sit far below the price. The earnings-power frame implies the price is many multiples above no-growth value, and only the growth-DCF methods (perpetual growth around $312, exit multiple around $211) reach or exceed the $143.26 price (June 27, 2026), both by extrapolating the recent 20%-plus growth. Management itself cautioned that Q1 strength was seasonal and should not be annualized. The bear case is that a high-quality, well-contracted midstream is being priced for sustained, data-center-driven growth that depends on a constructive regulator, steady drilling activity, and benign rates, three things outside the company's control, with little cushion if any one of them disappoints.

Valuation

DT Midstream is priced as an infrastructure growth story, and the method spread shows how much of the price rests on that growth continuing. At $143.26 the inversion reads roughly a 27 times operating-income multiple and an implied operating-profit growth of about 17.9%, which it classifies as within range but which is aggressive for a pipeline asset. The roughly 49.5% operating margin is genuine and reflects the contracted, toll-road economics of the base business, but the price is paying for that margin to extend across a large, expanding asset base.

The method X-ray is heavily tilted. The earnings-power and asset frames sit far below the price (the earnings-power premium implies the price is many times no-growth value, and the asset methods are well under $143), while the relative-multiple method lands modestly below. Only the growth-DCF methods reach or exceed the price: DCF Perpetual Growth at about $311.86 and DCF Exit Multiple at about $211.39, both extrapolating the recent 20%-plus growth over a multi-year stage. That pattern (only growth reaching the price) is the durability-premium signature, here underwritten by the $3.4 billion contracted backlog and the data-center demand rather than by a technology moat.

The practical read: this is a high-quality, well-contracted midstream priced for its growth backlog to convert into earnings. The valuation is reasonable if the contracted expansions energize on schedule and the data-center load materializes, and full if regulatory delay, softer drilling activity, or higher rates slow the conversion of backlog into cash flow.

Catalysts

The most recent catalyst was a strong Q1 2026 report on April 30 that sent the stock up about 9.5%. Operating EPS of $1.27 beat the $1.16 estimate by roughly 9.5%, revenue rose 10.9% to $336 million ahead of the roughly $320 million consensus, adjusted EBITDA reached $308 million (up from $293 million the prior quarter), net income was $130 million, and distributable cash flow surged to $274 million from $162 million. Management reaffirmed 2026 guidance and cautioned that the Q1 strength was seasonal and should not be annualized.

The growth backlog is the central forward catalyst. Management detailed a $3.4 billion project pipeline and approved two expansions, the Vector mainline expansion adding roughly 400 MMcf/d and Millennium R2R adding 70 MMcf/d, increasing committed capital to about $400 million for 2026 and $440 million for 2027. Commercial momentum includes a contingent 20-year, 265 MMcf/d power-plant lateral, a 250 MMcf/d NEXUS interconnect for a data center, oversubscribed open seasons for the Midwestern and Vector expansions, and LEAP operating at 2.1 Bcf/d with potential expansion toward 4 Bcf/d. Final investment decisions, regulatory approvals, and in-service dates on these projects are the milestones that convert backlog into earnings.

The demand backdrop is the broader driver: gas-fired power and data-center load are creating durable new volumes for well-positioned pipelines. The offsetting catalysts to watch are regulatory, since FERC approvals govern the expansions, and macro, since gathering volumes track drilling activity and gas prices while rates affect both financing and the sector multiple. Progress on the data-center interconnects and power-plant laterals is the clearest signal of whether the growth thesis is on track.

Sources: https://www.investing.com/news/company-news/dt-midstream-q1-2026-slides-earnings-beat-34b-growth-backlog-93CH-4650330 , https://www.stocktitan.net/sec-filings/DTM/8-k-dt-midstream-inc-reports-material-event-5f50ac999f6c.html , https://simplywall.st/stocks/us/energy/nyse-dtm/dt-midstream/news/why-dt-midstream-dtm-is-up-95-after-strong-q1-2026-results-a , https://finance.yahoo.com/sectors/energy/articles/dt-midstream-q1-earnings-call-111845747.html

Peer Cohorts (Per Segment, With Filing Citations)

Pipeline (reported)

Gathering (reported)

Methodology Note

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.

View the full interactive DTM report on boothcheck