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: $110.77 per share(market-calibrated)

+29.4%

Upside to Fair Value

Current

$85.58

Pure Model

$114.73

Fair Value

$110.77

Bull Case

$144.10

Bear Case

$92.90

Market Reality Check

Model Terminal Growth

2.00%

Market-Implied Growth

0.74%

Calibrated Growth

1.69%

Fair value uses 75% model / 25% market-implied terminal growth. Pure model: $114.73.

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 0.74% perpetual growth — 126bps 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)62.16%

Debt Weight (D/V)37.84%

WACC Calculation

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

WACC = (62.16% × 8.63%) + (37.84% × 2.50%)

= 6.31%

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	0.652	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%

WACC6.31%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$130.2B

PV of Terminal Value$70.6B

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$70.6B

Enterprise Value$103.3B

(-) Net Debt$32.7B

Equity Value$70.5B

Shares Outstanding630M

Price per Share$111.94

Exit Multiple Method

PV of Projected FCFs$32.6B

PV of Terminal Value$74.1B

Enterprise Value$106.8B

(-) Net Debt$32.7B

Equity Value$74.0B

Shares Outstanding630M

Price per Share$117.53

Pure Model Fair Value

$114.73

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%
4.31%	$163.97	$180.02	$203.03	$218.86	$208.10
5.31%	$128.21	$136.56	$147.42	$162.16	$183.27
6.31%	$103.73	$108.66	$114.73	$122.40	$132.38
7.31%	$85.45	$88.61	$92.36	$96.89	$102.47
8.31%	$71.02	$73.16	$75.64	$78.54	$81.99

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

$92.90

8.6% vs current

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

Base Case

$114.73

34.1% vs current

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

Bull Case

$144.10

68.4% 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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