Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Diamondback Energy, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from -1.9% to 0.1% 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 40, DPO 21, DIO 7). At a 6.6% WACC with mid-year discounting, the terminal value (81% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 8.0x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $342.60 per share, suggesting FANG is undervalued by 69.5% at the current price of $202.15.
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 | 7,393 | 7,700 | 8,050 | 8,068 | 8,072 | 8,274 |
| (−) Net Interest | 324 | 338 | 353 | 354 | 354 | 363 |
| (+) D&A | 5,182 | 6,250 | 7,114 | 7,830 | 7,135 | 7,313 |
| EBITDA | 12,899 | 14,288 | 15,517 | 16,251 | 15,561 | 15,950 |
| (−) Tax | 1,462 | 1,522 | 1,592 | 1,595 | 1,596 | — |
| (−) CapEx | 7,615 | 7,932 | 8,293 | 8,311 | 8,316 | — |
| (−) ΔWC | 1,052 | 56 | 64 | 3 | 1 | — |
| Free Cash Flow (FCF) | 2,770 | 4,777 | 5,569 | 6,342 | 5,648 | — |
| Peers' EBITDA Multiple | 8.0x | |||||
| Terminal Value | 127,281 | |||||
| WACC / Discount Rate | 6.63% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 2,682 | 4,339 | 4,742 | 5,065 | 4,231 | 92,317 |
| Enterprise Value | 113,376 | |||||
| Projection Period | 21,059 | 18.6% | ||||
| Terminal Value | 92,317 | 81.4% | ||||
| (−) Current Net Debt | 14,383 | |||||
| Equity Value | 98,993 | |||||
| (÷) Outstanding Shares | 289M | |||||
| Fair Price | $342 | +69.4% | ||||
| WACC \ EV/EBITDA Exit Multiple | 4.0x | 6.0x | 8.0x | 10.0x | 12.0x |
|---|---|---|---|---|---|
| 4.6% | $202 | $290 | $378 | $466 | $554 |
| 5.6% | $192 | $276 | $360 | $444 | $528 |
| 6.6% | $183 | $263 | $343 | $423 | $503 |
| 7.6% | $173 | $250 | $326 | $403 | $479 |
| 8.6% | $165 | $238 | $311 | $384 | $457 |
Current price: $202.15. 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.