ONEOK, Inc.OKENYSE

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

DCF Valuation

DCF Valuation Summary

Buy

Fair Value: $110.69 per share(market-calibrated)

+28.5%

Upside to Fair Value

Current

$86.12

Pure Model

$114.50

Fair Value

$110.69

Bull Case

$143.78

Bear Case

$92.69

Market Reality Check

Model Terminal Growth

2.00%

Market-Implied Growth

0.79%

Calibrated Growth

1.70%

Fair value uses 75% model / 25% market-implied terminal growth. Pure model: $114.50.

What's Driving This Ratingfor OKE

↓

CapEx normalizing toward maintenance

Historical CapEx is 6.45% of revenue (heavy investment phase). Model fades this to 5.50% by Year 10, freeing up ~$408M in annual FCF. This is the biggest driver of long-term cash flow improvement.

↑

Margin expansion modeled

Current EBIT margin is 19.32% — below the sector mature average of 20.72%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $8.3B (19.32% margin).

→

Moderate revenue growth

Analyst consensus projects 1.26% revenue growth, fading to 2.00% by Year 10. Revenue reaches $42.9B (vs $33.6B today).

🎯

Market pricing in lower growth than model

The market implies only 0.79% perpetual growth — 121bps below the model's 2.00%. This suggests the market sees headwinds or risks not in the model.

→

Moderate cash flow conversion

Year 10 FCF/EBITDA conversion is 56.35% — acceptable but leaves room for improvement. High reinvestment needs consume a meaningful portion of operating cash flow.

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.92

Market Risk Premium4.50%

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

Cost of Equity (Re)8.63%

Cost of Debt

Pre-tax Cost of Debt3.24%

Tax Rate22.90%

After-tax Cost of Debt2.50%

Equity Weight (E/V)62.31%

Debt Weight (D/V)37.69%

WACC Calculation

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

WACC = (62.31% × 8.63%) + (37.69% × 2.50%)

= 6.32%

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	$34.1B	$31.3B	$35.1B	$39.2B	$42.9B
EBIT	$6.6B	$6.1B	$6.8B	$7.6B	$8.3B
Tax	$1.5B	$1.4B	$1.6B	$1.7B	$1.9B
NOPAT	$5.1B	$4.7B	$5.2B	$5.8B	$6.4B
+ Depreciation	$1.2B	$1.1B	$1.2B	$1.4B	$1.5B
- Capex	$2.2B	$2.0B	$2.1B	$2.3B	$2.4B
- Δ NWC	$3M	-$25M	$15M	$12M	$5M
Free Cash Flow	$4.0B	$3.8B	$4.3B	$4.9B	$5.5B
Discount Factor	0.941	0.832	0.736	0.651	0.542
Present Value	$3.8B	$3.2B	$3.2B	$3.2B	$3.0B

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

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$5.5B

Terminal Growth Rate2.00%

WACC6.32%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$129.9B

PV of Terminal Value$70.4B

Exit Multiple Method

Year 10 EBITDA$9.8B

Exit Multiple (EV/EBITDA)14.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$136.7B

PV of Terminal Value$74.1B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$32.6B

PV of Terminal Value$70.4B

Enterprise Value$103.0B

(-) Net Debt$32.7B

Equity Value$70.3B

Shares Outstanding630M

Price per Share$111.59

Exit Multiple Method

PV of Projected FCFs$32.6B

PV of Terminal Value$74.1B

Enterprise Value$106.7B

(-) Net Debt$32.7B

Equity Value$74.0B

Shares Outstanding630M

Price per Share$117.40

Pure Model Fair Value

$114.50

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%
4.32%	$163.56	$179.51	$202.34	$218.86	$208.10
5.32%	$127.95	$136.25	$147.05	$161.69	$182.64
6.32%	$103.55	$108.45	$114.50	$122.12	$132.05
7.32%	$85.30	$88.45	$92.18	$96.70	$102.25
8.32%	$70.90	$73.03	$75.50	$78.40	$81.83

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

$92.69

7.6% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.15

Base Case

$114.50

32.9% vs current

• Analyst consensus
• Terminal growth: 2.0%
• Beta: 0.92

Bull Case

$143.78

67.0% vs current

• +25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 0.78

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Energy Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth1.26%

Year 3 Revenue Growth-11.48%

Year 5 Revenue Growth7.20%

Year 7 Revenue Growth5.12%

Year 10 Revenue Growth2.00%

Terminal Growth Rate2.00%

Margin & Efficiency

Current EBIT Margin19.32%

Terminal EBIT Margin20.72%

Tax Rate22.90%

Historical Capex / Rev6.45%

Terminal Capex / Rev5.50%

NWC / Revenue0.62%

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.

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