Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Texas Pacific Land Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 28.4% to 15.3% 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 70, DPO 197, DIO 1284). At a 7.6% WACC with mid-year discounting, the terminal value (69% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 6.3x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $154.70 per share, suggesting TPL is overvalued by 70.6% at the current price of $526.68.
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 | 853 | 978 | 1,149 | 1,326 | 1,529 | 1,567 |
| (−) Net Interest | 21 | 24 | 28 | 32 | 37 | 38 |
| (+) D&A | 28 | 33 | 39 | 47 | 54 | 55 |
| EBITDA | 901 | 1,035 | 1,216 | 1,404 | 1,620 | 1,660 |
| (−) Tax | 190 | 218 | 256 | 296 | 341 | — |
| (−) CapEx | 42 | 48 | 56 | 65 | 75 | — |
| (−) ΔWC | 259 | 55 | 75 | 78 | 89 | — |
| Free Cash Flow (FCF) | 411 | 714 | 828 | 966 | 1,115 | — |
| Peers' EBITDA Multiple | 6.3x | |||||
| Terminal Value | 10,526 | |||||
| WACC / Discount Rate | 7.61% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 396 | 639 | 689 | 748 | 801 | 7,296 |
| Enterprise Value | 10,569 | |||||
| Projection Period | 3,274 | 31.0% | ||||
| Terminal Value | 7,296 | 69.0% | ||||
| (−) Current Net Debt | (112) | |||||
| Equity Value | 10,682 | |||||
| (÷) Outstanding Shares | 69M | |||||
| Fair Price | $155 | -70.6% | ||||
| WACC \ EV/EBITDA Exit Multiple | 2.3x | 4.3x | 6.3x | 8.3x | 10.3x |
|---|---|---|---|---|---|
| 5.6% | $94 | $131 | $168 | $204 | $241 |
| 6.6% | $91 | $126 | $161 | $196 | $231 |
| 7.6% | $88 | $121 | $155 | $188 | $221 |
| 8.6% | $85 | $117 | $149 | $181 | $212 |
| 9.6% | $82 | $113 | $143 | $173 | $204 |
Current price: $526.68. 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.