Coterra Energy Inc.CTRANYSE

Overview Intelligence Charts News Fundamentals DCF Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $117.67 per share(market-calibrated)

+274.5%

Upside to Fair Value

Current

$31.42

Pure Model

$125.49

Fair Value

$117.67

Bull Case

$156.35

Bear Case

$100.91

Market Reality Check

Model Terminal Growth

2.00%

Market-Implied Growth

0.50%

Calibrated Growth

1.48%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $125.49.

What's Driving This Ratingfor CTRA

↓

CapEx normalizing toward maintenance

Historical CapEx is 25.21% of revenue (heavy investment phase). Model fades this to 5.50% by Year 10, freeing up ~$2.1B in annual FCF. This is the biggest driver of long-term cash flow improvement.

✓

Premium margins already priced in

EBIT margin of 36.80% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

⚠

Analyst growth decelerates sharply

Revenue growth drops from 37.68% in Year 1 to 2.00% by Year 5 (per analyst consensus). This growth deceleration is a key reason the model may undervalue the stock if growth re-accelerates.

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $148.78/share (29.1x terminal FCF) while exit multiple gives $102.21/share (17.4x terminal FCF). The base case averages both methods.

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 150bps below the model's 2.00%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 80.30% indicates efficient cash generation. FCF reaches $5.0B by Year 10 (47.78% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.36

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)6.12%

Cost of Debt

Pre-tax Cost of Debt1.92%

Tax Rate16.65%

After-tax Cost of Debt1.60%

Equity Weight (E/V)85.98%

Debt Weight (D/V)14.02%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (85.98% × 6.12%) + (14.02% × 1.60%)

= 5.50%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$7.5B	$8.8B	$9.6B	$9.9B	$10.6B
EBIT	$2.8B	$3.2B	$3.5B	$3.7B	$3.9B
Tax	$461M	$538M	$586M	$609M	$647M
NOPAT	$2.3B	$2.7B	$2.9B	$3.0B	$3.2B
+ Depreciation	$1.7B	$2.0B	$2.2B	$2.3B	$2.4B
- Capex	$1.9B	$1.8B	$1.6B	$1.2B	$580M
- Δ NWC	$101M	$27M	$9M	$10M	$10M
Free Cash Flow	$2.0B	$2.8B	$3.5B	$4.1B	$5.0B
Discount Factor	0.948	0.852	0.765	0.687	0.585
Present Value	$1.9B	$2.4B	$2.7B	$2.8B	$3.0B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$5.0B

Terminal Growth Rate2.00%

WACC5.50%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$146.9B

PV of Terminal Value$86.0B

Exit Multiple Method

Year 10 EBITDA$6.3B

Exit Multiple (EV/EBITDA)14.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$87.9B

PV of Terminal Value$51.5B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$26.1B

PV of Terminal Value$86.0B

Enterprise Value$112.2B

(-) Net Debt$1.8B

Equity Value$110.4B

Shares Outstanding742M

Price per Share$148.78

Exit Multiple Method

PV of Projected FCFs$26.1B

PV of Terminal Value$51.5B

Enterprise Value$77.6B

(-) Net Debt$1.8B

Equity Value$75.8B

Shares Outstanding742M

Price per Share$102.21

Pure Model Fair Value

$125.49

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.00%	1.50%	2.00%	2.50%	3.00%
3.50%	$176.36	$201.29	$193.02	$185.14	$177.62
4.50%	$136.15	$147.04	$162.28	$185.14	$177.62
5.50%	$112.17	$118.00	$125.49	$135.49	$149.48
6.50%	$95.77	$99.28	$103.56	$108.91	$115.80
7.50%	$83.60	$85.87	$88.55	$91.78	$95.71

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$100.91

221.2% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 0.45

Base Case

$125.49

299.4% vs current

• Analyst consensus
• Terminal growth: 2.0%
• Beta: 0.36

Bull Case

$156.35

397.6% vs current

• +25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 0.31

Key Assumptions & Drivers• Energy Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth37.68%

Year 3 Revenue Growth6.59%

Year 5 Revenue Growth2.00%

Year 7 Revenue Growth2.00%

Year 10 Revenue Growth2.00%

Terminal Growth Rate2.00%

Margin & Efficiency

Current EBIT Margin36.80%

Tax Rate16.65%

Historical Capex / Rev25.21%

Terminal Capex / Rev5.50%

NWC / Revenue4.91%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 14x EV/EBITDA (Energy sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

Explore More

S&P 500 Screener

Filter and sort all 500 stocks

Market Movers

Today's biggest gainers and losers

Market Heatmap

Visual sector performance