Exxon Mobil CorporationXOMNYSE

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DCF Valuation

⚠️Model Warnings

•Revenue projections show 10% decline from peak. Analyst estimates may reflect secular headwinds or transition period.

DCF Valuation Summary

Buy

Fair Value: $188.18 per share(market-calibrated)

+22.0%

Upside to Fair Value

Current

$154.19

Pure Model

$194.78

Fair Value

$188.18

Bull Case

$215.61

Bear Case

$182.77

Market Reality Check

Model Terminal Growth

2.00%

Market-Implied Growth

0.50%

Calibrated Growth

1.63%

Fair value uses 75% model / 25% market-implied terminal growth. Pure model: $194.78.

What's Driving This Ratingfor XOM

↓

CapEx normalizing toward maintenance

Historical CapEx is 6.49% of revenue (heavy investment phase). Model fades this to 5.50% by Year 10, freeing up ~$3.2B in annual FCF. This is the biggest driver of long-term cash flow improvement.

→

Moderate revenue growth

Analyst consensus projects -2.14% revenue growth, fading to 2.00% by Year 10. Revenue reaches $328.4B (vs $323.9B today).

🎯

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.

→

Moderate cash flow conversion

Year 10 FCF/EBITDA conversion is 56.06% — 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)0.36

Market Risk Premium4.50%

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

Cost of Equity (Re)6.11%

Cost of Debt

Pre-tax Cost of Debt1.93%

Tax Rate27.88%

After-tax Cost of Debt1.39%

Equity Weight (E/V)93.88%

Debt Weight (D/V)6.12%

WACC Calculation

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

WACC = (93.88% × 6.11%) + (6.12% × 1.39%)

= 5.82%

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	$317.0B	$338.5B	$303.8B	$311.5B	$328.4B
EBIT	$47.5B	$50.8B	$45.6B	$46.7B	$49.3B
Tax	$13.3B	$14.2B	$12.7B	$13.0B	$13.7B
NOPAT	$34.3B	$36.6B	$32.9B	$33.7B	$35.5B
+ Depreciation	$22.5B	$24.0B	$21.5B	$22.1B	$23.3B
- Capex	$20.6B	$21.2B	$18.4B	$18.2B	$18.1B
- Δ NWC	-$80M	$34M	$32M	$48M	$74M
Free Cash Flow	$36.3B	$39.3B	$36.0B	$37.5B	$40.7B
Discount Factor	0.945	0.844	0.754	0.673	0.568
Present Value	$34.3B	$33.2B	$27.1B	$25.3B	$23.1B

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

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$40.7B

Terminal Growth Rate2.00%

WACC5.82%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$1.1T

PV of Terminal Value$616.1B

Exit Multiple Method

Year 10 EBITDA$72.5B

Exit Multiple (EV/EBITDA)14.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$1.0T

PV of Terminal Value$576.5B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$280.1B

PV of Terminal Value$616.1B

Enterprise Value$896.2B

(-) Net Debt$32.9B

Equity Value$863.3B

Shares Outstanding4.3B

Price per Share$199.34

Exit Multiple Method

PV of Projected FCFs$280.1B

PV of Terminal Value$576.5B

Enterprise Value$856.7B

(-) Net Debt$32.9B

Equity Value$823.8B

Shares Outstanding4.3B

Price per Share$190.21

Pure Model Fair Value

$194.78

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%
3.82%	$259.79	$285.34	$304.04	$291.77	$280.07
4.82%	$210.95	$223.05	$239.43	$262.87	$280.07
5.82%	$179.48	$186.24	$194.78	$205.88	$220.93
6.82%	$156.76	$160.94	$165.99	$172.21	$180.05
7.82%	$139.21	$141.97	$145.21	$149.06	$153.70

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

$182.77

18.5% vs current

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

Base Case

$194.78

26.3% vs current

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

Bull Case

$215.61

39.8% vs current

• +25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 0.30

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

Growth Assumptions (Select Years)

Year 1 Revenue Growth-2.14%

Year 3 Revenue Growth0.88%

Year 5 Revenue Growth0.93%

Year 7 Revenue Growth1.36%

Year 10 Revenue Growth2.00%

Terminal Growth Rate2.00%

Margin & Efficiency

Current EBIT Margin15.00%

Tax Rate27.88%

Historical Capex / Rev6.49%

Terminal Capex / Rev5.50%

NWC / Revenue1.15%

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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