Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Phillips 66's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 5.2% to 7.0% 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 26, DPO 27, DIO 11). At a 7.0% WACC with mid-year discounting, the terminal value (79% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 11.9x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $193.76 per share, suggesting PSX is fairly valued by 4.6% at the current price of $185.31.
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 | 4,413 | 4,409 | 4,562 | 5,511 | 5,899 | 6,047 |
| (−) Net Interest | 811 | 810 | 838 | 1,012 | 1,083 | 1,111 |
| (+) D&A | 2,113 | 2,163 | 2,146 | 2,099 | 2,254 | 2,310 |
| EBITDA | 7,337 | 7,382 | 7,546 | 8,621 | 9,237 | 9,468 |
| (−) Tax | 788 | 787 | 815 | 984 | 1,053 | — |
| (−) CapEx | 2,111 | 2,109 | 2,182 | 2,635 | 2,821 | — |
| (−) ΔWC | -1,862 | -4 | 143 | 890 | 364 | — |
| Free Cash Flow (FCF) | 6,300 | 4,490 | 4,406 | 4,112 | 4,998 | — |
| Peers' EBITDA Multiple | 11.9x | |||||
| Terminal Value | 112,475 | |||||
| WACC / Discount Rate | 7.05% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 6,089 | 4,054 | 3,717 | 3,240 | 3,679 | 80,024 |
| Enterprise Value | 100,803 | |||||
| Projection Period | 20,779 | 20.6% | ||||
| Terminal Value | 80,024 | 79.4% | ||||
| (−) Current Net Debt | 21,766 | |||||
| Equity Value | 79,037 | |||||
| (÷) Outstanding Shares | 408M | |||||
| Fair Price | $194 | +4.5% | ||||
| WACC \ EV/EBITDA Exit Multiple | 7.9x | 9.9x | 11.9x | 13.9x | 15.9x |
|---|---|---|---|---|---|
| 5.0% | $143 | $179 | $215 | $252 | $288 |
| 6.0% | $135 | $170 | $204 | $239 | $273 |
| 7.0% | $128 | $161 | $194 | $227 | $260 |
| 8.0% | $121 | $152 | $184 | $215 | $247 |
| 9.0% | $114 | $144 | $174 | $204 | $235 |
Current price: $185.31. 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.