Is ConocoPhillips (COP) Stock a Buy? A Fundamental Valuation Breakdown

PUBLISHED May 2, 2025, 6:43:53 AM        SHARE

img
imgInvesting with James on YouTube
Stockteamup Important!

Investing with James on YouTube is Leading the Pack! Read on for proven investment insight!

Introduction

ConocoPhillips (NYSE: COP) is currently trading at $102.77 per share and is a top holding in the Schwab U.S. Dividend Equity ETF (SCHD) with a 4.6% portfolio weighting. Given SCHD’s popularity among dividend investors, COP’s 3.15% yield makes it an attractive pick.

Despite a 250% gain over the last five years, ConocoPhillips has dropped 18% over the past year. Is now the right time to buy? This analysis will assess its latest financials and apply discounted free cash flow (DCF), comparable company valuation, dividend discount model (DDM), and Ben Graham’s intrinsic value model to determine if COP is fairly valued or undervalued.

ConocoPhillips Financial Overview

Key Metrics:

  • Market Cap: $130 billion
  • Price-to-Earnings (P/E) Ratio: 13.17 (below the market average of 28.39)
  • Earnings Per Share (EPS): $7.81
  • Beta: 1.11 (moderate volatility)
  • Analyst Price Target: $128 (suggesting potential upside)
  • Dividend Yield: 3.15%, paying $3.11 per share
  • Dividend Payout Ratios:
    • Profit-Based Payout: 39%
    • Free Cash Flow-Based Payout: 42%

Revenue and Profitability:

  • Annual Revenue: $55.24 billion, flat year-over-year, but improved compared to 2021 and 2020.
  • Net Income: $9.95 billion, down from the previous year.
  • Free Cash Flow (FCF): $9.25 billion, higher than 2022 figures.
  • Operating Cash Flow (OCF): Up year-over-year, despite higher CapEx spending.

The company has repurchased shares, supporting shareholder value.

Valuation Analysis

Discounted Free Cash Flow (DCF) Model:

DCF values stocks by estimating future free cash flows and discounting them to the present.

Inputs:

  • Revenue Growth Projections: 5% annually (based on estimates of $60-$61 billion in future years).
  • Net Income Margins: 18%
  • Discount Rate: 8%

Based on these assumptions, COP’s intrinsic value is approximately $128 per share, suggesting it is undervalued at current levels.

Dividend Discount Model (DDM):

DDM evaluates stocks based on dividend growth. If COP maintains 6% or higher dividend growth, it supports a buy rating. Historical dividend increases reinforce this model's conclusion.

Ben Graham’s Intrinsic Value Formula:

Ben Graham’s valuation approach incorporates earnings growth and bond yields.

  • AAA Bond Yield: 5.32%
  • Expected Growth Rate: 8.62%

Applying Graham’s model places COP’s intrinsic value at approximately $110 per share, supporting a buy case.

Comparable Company Model:

To assess COP’s valuation relative to industry peers, we compare key metrics with:

  • ExxonMobil (XOM)
  • Chevron (CVX)
  • Occidental Petroleum (OXY)

Key Comparisons:

  • Revenue Growth: COP ranks second-highest among its peers.
  • Profit Margins: COP leads the group with an 18% margin.
  • Price-to-Earnings (P/E) Ratio: Lowest among competitors, indicating potential undervaluation.
  • EV/EBITDA: Near the lower end of the industry average, reinforcing a fair valuation.

After factoring in these comparisons, COP’s valuation aligns around $108 per share, suggesting it is slightly undervalued.

Conclusion: Is COP a Buy?

All three valuation models suggest ConocoPhillips is an attractive buy:

  • DCF Model estimates intrinsic value around $128 per share.
  • Ben Graham’s Formula suggests $110 per share.
  • Comparable Company Analysis values COP around $108 per share.

With a strong dividend payout, share buybacks, and competitive profit margins, COP appears undervalued at its current price.

Final Verdict: COP is a buy based on fundamental analysis, with strong long-term potential.

https://youtu.be/YJoAjtcUsYc?si=Yl9xaPQYIDhzGuTv



Sound investments
don't happen alone

Find your crew, build teams, compete in VS MODE, and identify investment trends in our evergrowing investment ecosystem. You aren't on an island anymore, and our community is here to help you make informed decisions in a complex world.

More Reads
Is American Airlines (AAL) Stock a Buy? A Comprehensive Valuation Analysis
Image

Since the major market shock in 2020, which saw a 70% decline, AAL has rebounded but continues to exhibit volatility.

Is Robinhood Markets Inc. (HOOD) a Buy After Recent Volatility?
Image

Robinhood Markets Inc. (HOOD) has experienced significant price swings over the past year, making it a focal point for investors looking for opportunities in the online brokerage space.

Microsoft Corporation (MSFT): A Deep Dive into Valuation and Growth Prospects
Image

Microsoft Corporation (NASDAQ: MSFT) remains a dominant force in the tech industry, but with recent stock price fluctuations and evolving financial metrics, investors are wondering whether it's a buy or sell opportunity.

Intel Corporation’s New CEO Lip-Bu Tan: A Turning Point for INTC Stock?
Image

Intel Corporation (NASDAQ: INTC) recently announced the appointment of Lip-Bu Tan as its new CEO, sending the stock price soaring by 15% to $24 per share. Investors are eager to see how his leadership will impact the struggling semiconductor giant.

Verizon Stock Analysis: Is This Dividend Giant Undervalued?
Image

Despite today's selloff, Verizon has experienced a 10% rally over the past five days, drawing increased interest from investors.

Is Altria Group (MO) a Strong Buy Amidst Market Volatility?
Image

The S&P 500 has experienced a sharp decline, dropping approximately 7% from its prior highs

Coinbase Stock Analysis: Is COIN a Buy or Sell?
Image

Coinbase (NASDAQ: COIN) surged 10% in pre-market trading to $235 per share, tracking Bitcoin’s price movement. Bitcoin itself spiked 10% on Sunday, currently sitting at $93,000.

Analyzing Fortinet: Is This Cybersecurity Giant Worth the Hype?
Image

In today's digital era, where innovation and cybersecurity intertwine, Fortinet (FTNT) has emerged as a prominent player in IT and cloud security.

Taiwan Semiconductor Manufacturing Company: A Stock Analysis
Image

Today, we're diving deep into Taiwan Semiconductor Manufacturing Company (TSMC), a prominent name in the semiconductor industry.

Exploring PayPal Holdings: Is This Stock a Hidden Gem for Patient Investors?
Image

Are you on the hunt for a stock that aligns with a safe investing strategy but offers surprising opportunities?

Target Stock Analysis: Cash Flow, Debt, and Dividends
Image

Target Corporation (Ticker: TGT), a household name in retail, has demonstrated resilience and challenges in its financial metrics over recent years.

Salesforce (CRM) Analysis: Is It Worth Investing in 2024?
Image

Salesforce, Inc. (Ticker: CRM), a mega-cap technology company, stands as the 24th largest on the S&P 500 index, showcasing its significant impact on the U.S. economy.

McDonald's Stock Analysis: Examining Intrinsic Value Amid Recent Challenges
Image

Hello, my name is Carus McCord, CPA, and today, I’ll be conducting an in-depth stock analysis of McDonald's (NYSE: MCD). This iconic fast-food giant recently experienced a significant challenge—a reported E. coli outbreak affecting 75 individuals across 13 U.S. states.

Is Adobe Stock (Ticker: ADBE) Worth Investing in Today?
Image

Adobe Inc. (NASDAQ: ADBE) has established itself as a global leader in digital media and marketing solutions, consistently delivering innovation across its product portfolio.

Microsoft Stock Analysis: Is MSFT is a BUY!
Image

Microsoft Corporation (NASDAQ: MSFT) has undergone a significant transformation over the past decade, evolving from a company centered around Windows and Office products to a tech powerhouse dominating cloud services, artificial intelligence (AI), and subscription-based offerings.

Analyzing Chevron Stock (Ticker: CVX)
Image

Chevron Corporation, a global leader in integrated oil and gas, has long been a favorite for energy investors. With its diverse portfolio, significant financial metrics, and notable business strategies, Chevron’s stock poses a compelling question: is it a buy, hold, or sell today?

Is Nike Stock a Buy, Hold, or Sell? A Comprehensive Analysis
Image

Nike Inc. (NYSE: NKE) has been a giant in the global footwear and apparel industry for decades, but its recent stock performance has raised eyebrows.

Unilever Stock: Buy, Hold, or Sell?
Image

In today's analysis, we're diving deep into Unilever stock to determine whether it's a buy, a hold, or a sell. This overview will cover several key aspects: what Unilever does, its financial performance, dividend analysis, and valuation.

Is Home Depot Stock a Buy, Hold, or Sell? A Comprehensive Analysis
Image

Today, we're diving deep into Home Depot (HD), the go-to retailer for all things home improvement. We'll analyze whether it's a buy, hold, or sell by examining its business model, financials, dividend performance, and valuation.

Lululemon: Undervalued Opportunity or Value Trap?
Image

Ticker symbol LULU has seen a significant drop of over 20%, leaving investors questioning whether Lululemon represents an undervalued opportunity or a value trap.

Resources for Publishers
Resources for New Investors
Boosted with BossCoin
Top Investors
user_profile
Tom Hamilton
user_profile
Wise Intelligent
user_profile
Mark Robertson
user_profile
Kevin Matthews II
user_profile
Akeiva Ellis
user_profile
Brendan Dale
user_profile
Kenneth Chavis IV
user_profile
Sharita Humphrey