Using an unlevered Free Cash Flow to Firm (FCFF) model, we project APA Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from -14.0% to -3.0% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 60, DPO 63, DIO 33). At a 6.4% WACC with mid-year discounting, the terminal value (72% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 7.5x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $111.13 per share, suggesting APA is undervalued by 161.2% at the current price of $42.54.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 2,993 | 3,006 | 3,028 | 3,301 | 3,203 | 3,283 |
| (−) Net Interest | 266 | 267 | 269 | 293 | 284 | 291 |
| (+) D&A | 2,296 | 2,456 | 2,360 | 2,274 | 2,125 | 2,178 |
| EBITDA | 5,555 | 5,728 | 5,656 | 5,868 | 5,612 | 5,753 |
| (−) Tax | 687 | 689 | 694 | 757 | 735 | — |
| (−) CapEx | 1,908 | 1,916 | 1,930 | 2,104 | 2,042 | — |
| (−) ΔWC | 383 | 4 | 7 | 85 | -30 | — |
| Free Cash Flow (FCF) | 2,577 | 3,119 | 3,025 | 2,922 | 2,866 | — |
| Peers' EBITDA Multiple | 7.5x | |||||
| Terminal Value | 43,203 | |||||
| WACC / Discount Rate | 6.36% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 2,499 | 2,844 | 2,593 | 2,355 | 2,172 | 31,741 |
| Enterprise Value | 44,202 | |||||
| Projection Period | 12,462 | 28.2% | ||||
| Terminal Value | 31,741 | 71.8% | ||||
| (−) Current Net Debt | 4,294 | |||||
| Equity Value | 39,908 | |||||
| (÷) Outstanding Shares | 359M | |||||
| Fair Price | $111 | +161.3% | ||||
| WACC \ EV/EBITDA Exit Multiple | 3.5x | 5.5x | 7.5x | 9.5x | 11.5x |
|---|---|---|---|---|---|
| 4.4% | $70 | $96 | $122 | $147 | $173 |
| 5.4% | $67 | $92 | $116 | $141 | $166 |
| 6.4% | $64 | $88 | $111 | $135 | $158 |
| 7.4% | $61 | $84 | $106 | $129 | $151 |
| 8.4% | $59 | $80 | $102 | $123 | $145 |
Current price: $42.54. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.