• If you are wondering whether ConocoPhillips is reasonably priced or offers value at current levels, this article will walk you through what the numbers are actually saying about the stock.
• The share price recently closed at US$111.43, with returns of 3.5% over 7 days, 11.1% over 30 days, 15.2% year to date and 18.8% over 1 year, which is likely to catch the eye of investors tracking momentum and changing risk sentiment.
• Recent news around ConocoPhillips has focused on its position as a major US energy producer and ongoing interest from investors who track large cap oil and gas names. These headlines help frame how the market is thinking about the stock, which is useful context when you compare price action to underlying value.
• On our simple 6 point valuation checklist, ConocoPhillips scores a 3 out of 6, suggesting some potential areas where the stock may be priced below certain valuation benchmarks. Next we will walk through those methods before finishing with a more complete way to think about valuation that goes beyond any single model.

Approach 1: ConocoPhillips Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model projects the cash a business could generate in the future and then discounts those cash flows back to today to estimate what the company might be worth right now.

For ConocoPhillips, the model uses a 2 Stage Free Cash Flow to Equity approach based on cash flow projections. The latest twelve month free cash flow is around $7.4b. Analyst based projections extend out to 2030, with Simply Wall St extrapolating further to build a 10 year path, including an estimated free cash flow of $13.3b in 2030 and discounted values for each year through to 2035.

When all those projected cash flows are added and discounted, the model arrives at an estimated intrinsic value of about $286.45 per share. Compared to the recent share price of $111.43, this implies the stock is around 61.1% undervalued under these DCF assumptions.

Based on these cash flow projections, the DCF output indicates that ConocoPhillips is trading below its modeled intrinsic value.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests ConocoPhillips is undervalued by 61.1%. Track this in your watchlist or portfolio, or discover 53 more high quality undervalued stocks.

Approach 2: ConocoPhillips Price vs Earnings

For a profitable company like ConocoPhillips, the P/E ratio is a useful yardstick because it connects what you pay for the stock to the earnings the business is currently generating. Investors generally accept that higher expected growth and lower perceived risk can justify a higher P/E, while slower growth or higher risk tend to support a lower, more conservative multiple.

ConocoPhillips currently trades on a P/E of 17.09x. That sits above both the Oil and Gas industry average P/E of 14.46x and the peer group average of 13.55x, which might initially make the stock look relatively expensive compared to its sector and closest comparables.

Simply Wall St’s Fair Ratio for ConocoPhillips is 24.70x. This is a proprietary estimate of what a reasonable P/E could be given factors such as earnings growth, profit margins, industry, market cap and company specific risks. Because it blends these company level drivers rather than just comparing plain averages, it can offer a more tailored reference point than simple peer or industry comparisons. Set against this Fair Ratio, the current 17.09x P/E is materially lower, which indicates the shares are trading below that modeled reference level.

Result: UNDERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 23 top founder-led companies.

Upgrade Your Decision Making: Choose your ConocoPhillips Narrative

Earlier we mentioned that there is an even better way to understand valuation. Narratives on Simply Wall St let you connect your view of ConocoPhillips' story to specific forecasts for revenue, earnings and margins, translate that into a Fair Value, then compare it to the current price to decide whether the stock looks attractive or not based on your own assumptions. All of this is available within an easy tool on the Community page that updates as new news or earnings arrive. One investor might build a Narrative that leans on growing LNG projects, cost management and dividend support to justify a higher fair value. Another might focus on Venezuela related uncertainty, execution risks on large projects and differing analyst price targets ranging from about US$100.00 to the low US$130s with a consensus around US$116.54 and Simply Wall St's fair value of US$114.74, leading to a more cautious fair value. This makes clear how the same company can support very different but clearly framed decisions.

Do you think there's more to the story for ConocoPhillips? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.