Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Devon Energy Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from -3.4% to 20.3% 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 39, DPO 34, DIO 8). At a 7.2% WACC with mid-year discounting, the terminal value (84% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 9.6x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $124.97 per share, suggesting DVN is undervalued by 143.6% at the current price of $51.30.
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 | 3,679 | 4,173 | 4,715 | 4,141 | 4,981 | 5,106 |
| (−) Net Interest | 408 | 463 | 523 | 459 | 552 | 566 |
| (+) D&A | 4,425 | 4,919 | 4,910 | 5,269 | 4,786 | 4,906 |
| EBITDA | 8,512 | 9,555 | 10,148 | 9,869 | 10,320 | 10,578 |
| (−) Tax | 634 | 719 | 813 | 714 | 859 | — |
| (−) CapEx | 4,479 | 5,080 | 5,740 | 5,041 | 6,064 | — |
| (−) ΔWC | 1,142 | 133 | 146 | -154 | 226 | — |
| Free Cash Flow (FCF) | 2,257 | 3,623 | 3,450 | 4,268 | 3,171 | — |
| Peers' EBITDA Multiple | 9.6x | |||||
| Terminal Value | 101,972 | |||||
| WACC / Discount Rate | 7.22% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 2,179 | 3,263 | 2,898 | 3,344 | 2,317 | 71,957 |
| Enterprise Value | 85,958 | |||||
| Projection Period | 14,002 | 16.3% | ||||
| Terminal Value | 71,957 | 83.7% | ||||
| (−) Current Net Debt | 7,349 | |||||
| Equity Value | 78,609 | |||||
| (÷) Outstanding Shares | 629M | |||||
| Fair Price | $125 | +143.6% | ||||
| WACC \ EV/EBITDA Exit Multiple | 5.6x | 7.6x | 9.6x | 11.6x | 13.6x |
|---|---|---|---|---|---|
| 5.2% | $85 | $111 | $137 | $163 | $190 |
| 6.2% | $81 | $106 | $131 | $156 | $181 |
| 7.2% | $78 | $101 | $125 | $149 | $172 |
| 8.2% | $74 | $97 | $119 | $142 | $165 |
| 9.2% | $71 | $92 | $114 | $136 | $157 |
Current price: $51.30. 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.