ConocoPhillips (COP)

Conclusion

ConocoPhillips is an independent oil and gas producer headquartered in Houston. It explores for, produces and markets crude oil, bitumen, natural gas, LNG and natural gas liquids across the United States, Canada, Europe, the Middle East, North Africa and Asia Pacific. At 134.47 USD on 9 November 2026, the shares carry a market capitalisation of 158.99 billion USD and an enterprise value of 172.32 billion USD.

The verdict is fair. The P/E of 13.76 sits at a premium of 10.5% to its ten-year median of 12.45, while the EV/EBITDA of 5.64 is at a discount of 4.1% to its median of 5.88. The discounted cash flow value is 196.62 USD per share at a discount rate of 8.87%. The fair value from historical multiples is 132.19 USD. The fair value band runs from 131.52 to 197.29 USD, with a midpoint of 164.40 USD and a margin of safety of 22.3% at the current price. The reverse DCF implies growth of 0.95% a year, against revenue growth of 25.7% a year over the last five years.

What holds the case up is a return on invested capital of 15.3% against a weighted average cost of capital of 8.15%, a spread of 7.2% as given. Net debt to EBITDA of 0.44 and free cash flow conversion of 96.2% over the trailing twelve months support the balance sheet and the cash generation. What could break it is the three-year EPS compound growth of -24.2%, the next-year EPS growth estimate of -5.3%, and a share count that has risen by 3.1% a year over five years.

Financial health

Financial strength is green, held up by a Altman Z-score of 3.52, net debt to EBITDA of 0.44, interest coverage of 18.5x and a current ratio of 1.52. The quick ratio is 1.30 and debt to equity is 0.35, both at comfortable levels. The Altman model was designed for manufacturers, so its zone of safe is an approximation for an oil producer. Insolvency risk is low, about 0.1% by the estimate of the Ohlson model over one to two years. The Ohlson O-score is -6.82, well below the range where distress is typically flagged. Debt has fallen by 16.9% a year over five years on an annual basis, which means the company has been reducing its borrowings.

Earnings quality

Earnings quality is yellow. Free cash flow conversion is strong at 96.2% over the trailing twelve months and 97.9% over five years, and the accrual ratio of -0.0965 shows cash earnings running ahead of reported profit. The Beneish M-score of -3.77 is read as unlikely to indicate manipulation. The Piotroski score is 6 out of 9. Free cash flow after stock-based compensation is 11.11 billion USD; the stock-based compensation figure as a share of revenue is not available because the company does not report it in the data. The share count has risen by 3.1% a year over five years, which is dilution rather than buybacks. The company beat earnings estimates in seven of the last eight quarters, with an average surprise of 6.3%. Estimates for the current year rose by 17.9% over 90 days, while the next year estimate was revised up by 23.2%.

Profitability

Profitability is green. The gross margin of 34.7% sits above its ten-year median of 29.3%, the operating margin of 24.6% is above its median of 22.5%, and the net margin of 17.1% is in line with its median of 17.0%. Margins have been stable, with a stability value of 1.01. Return on invested capital is 15.3% against a weighted average cost of capital of 8.15%, and the given spread is 7.2%, which indicates value creation. Return on equity of 17.5% is supported by a DuPont split that combines a net margin of 13.6%, an asset turnover of 0.48 and an equity multiplier of 1.89 at the 2025 year end, so leverage contributes but does not drive the result.

Growth

Growth is red. Revenue compound growth is -9.1% over three years, 25.7% over five years and 7.1% over ten years. Revenue grew in five of the last ten years. Earnings per share fell at a compound rate of 24.2% over three years, and free cash flow per share fell by 25.9% over the same period, although it grew by 135.0% over five years. The next-year earnings estimate implies a decline of 5.3%. The recent three-year decline in earnings and cash flow per share is the central weakness, and the five-year growth figures reflect a much earlier phase of the cycle.

Valuation

Valuation is yellow. The P/E of 13.76 is at a premium of 10.5% to its ten-year median, the price to book of 2.41 is at a premium of 12.0%, and the price to sales of 2.35 is at a premium of 1.7%. The EV/EBITDA of 5.64 is at a discount of 4.1% and the price to free cash flow of 14.31 is at a discount of 2.4%. The discounted cash flow value is 196.62 USD per share at a discount rate of 8.87%, and the fair value from historical multiples is 132.19 USD. The reverse DCF implies growth of 0.95% a year, against five-year revenue growth of 25.7% and five-year free cash flow per share growth of 135.0%. The dividend yield is 2.58%, the forward yield is 2.73%, and the payout on free cash flow is 36.9%.

Risks

The main risk is a continued fall in earnings per share, which at a three-year rate of -24.2% and a next-year estimate of -5.3% would weaken the case for the current multiples. A rising share count, up 3.1% a year, dilutes the value per share for holders. The stock-based compensation figure is not available, so its effect on earnings cannot be measured here. Revenue growth has been uneven, with three-year growth of -9.1%. The valuation depends on fixed assumptions, including a 5% equity risk premium and capped long-term growth, so the fair value band is an order of magnitude rather than a price target. This analysis has no debt maturity schedule and no revenue split by segment, so it cannot judge refinancing timing or which operations drive results.