Stock Analysis on Net

ConocoPhillips (NYSE:COP)

Enterprise Value to FCFF (EV/FCFF) 

Microsoft Excel

Free Cash Flow to The Firm (FCFF)

ConocoPhillips, FCFF calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net income (loss) attributable to ConocoPhillips 9,245 10,957 18,680 8,079 (2,701)
Net income attributable to noncontrolling interests 46
Net noncash charges 11,060 10,390 9,868 7,646 7,829
Working capital adjustments (181) (1,382) (234) 1,271 (372)
Net cash provided by operating activities 20,124 19,965 28,314 16,996 4,802
Cash payments, interest, net of tax1 545 472 578 588 663
Interest capitalized, net of tax2 168 103 38 39 46
Capital expenditures and investments (12,118) (11,248) (10,159) (5,324) (4,715)
Free cash flow to the firm (FCFF) 8,719 9,292 18,771 12,299 797

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).


The financial data indicates significant fluctuations in the cash flow metrics over the observed period. Operating cash flow shows a notable upward trend from 2020 to 2022, followed by a decline in the subsequent years.

Net cash provided by operating activities
This figure rose dramatically from 4,802 million in 2020 to 16,996 million in 2021, then peaked at 28,314 million in 2022. However, there was a decline to 19,965 million in 2023, with a slight increase to 20,124 million in 2024. This suggests strong operational performance improvement through 2022, followed by a partial contraction in the following two years.
Free cash flow to the firm (FCFF)
FCFF exhibited a similar trajectory, increasing from 797 million in 2020 to 12,299 million in 2021, and further to 18,771 million in 2022. Subsequently, it decreased to 9,292 million in 2023 and further to 8,719 million in 2024. This downward trend after 2022 may reflect higher capital expenditures, reduced operational efficiency, or other cash outflows impacting the free cash available to stakeholders.

Overall, the trends show an initial period of strong cash generation and operational improvement up to 2022, followed by a noticeable decline in both operating cash flow and free cash flow in the most recent years. While the free cash flow remains positive, the reduction from peak values indicates potential challenges in sustaining the high cash generating capacity experienced earlier.


Interest Paid, Net of Tax

ConocoPhillips, interest paid, net of tax calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Effective Income Tax Rate (EITR)
EITR1 32.40% 32.70% 33.80% 36.40% 15.50%
Interest Paid, Net of Tax
Cash payments, interest, before tax 806 701 873 924 785
Less: Cash payments, interest, tax2 261 229 295 336 122
Cash payments, interest, net of tax 545 472 578 588 663
Interest Costs Capitalized, Net of Tax
Interest capitalized, before tax 248 153 58 62 55
Less: Interest capitalized, tax3 80 50 20 23 9
Interest capitalized, net of tax 168 103 38 39 46

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 See details »

2 2024 Calculation
Cash payments, interest, tax = Cash payments, interest × EITR
= 806 × 32.40% = 261

3 2024 Calculation
Interest capitalized, tax = Interest capitalized × EITR
= 248 × 32.40% = 80


Effective Income Tax Rate (EITR)
The Effective Income Tax Rate exhibited a significant increase from 15.5% in 2020 to 36.4% in 2021. Following this sharp rise, it demonstrated a moderate decline over the subsequent years, reducing to 33.8% in 2022, 32.7% in 2023, and slightly further to 32.4% in 2024. This suggests that tax expenses relative to taxable income increased markedly in 2021 but have since stabilized at a higher level than in 2020.
Cash Payments, Interest, Net of Tax
Cash interest payments, net of tax, showed a consistent downward trend from 663 million USD in 2020 to 472 million USD in 2023. Notably, there was a minor increase to 545 million USD in 2024. This pattern indicates a general reduction in cash interest outflows over the period, potentially reflecting lower debt levels, refinancing at more favorable rates, or improved cash management, with a slight reversal in the final year observed.
Interest Capitalized, Net of Tax
Interest capitalized net of tax remained relatively stable at low levels between 38 and 46 million USD in the years 2020 through 2022. However, there was a pronounced increase starting in 2023, reaching 103 million USD, and continuing to escalate to 168 million USD in 2024. This upward trend suggests a growing portion of interest expenses being capitalized, possibly due to increased investment in capital projects or changes in accounting practices related to asset capitalization.

Enterprise Value to FCFF Ratio, Current

ConocoPhillips, current EV/FCFF calculation, comparison to benchmarks

Microsoft Excel
Selected Financial Data (US$ in millions)
Enterprise value (EV) 136,473
Free cash flow to the firm (FCFF) 8,719
Valuation Ratio
EV/FCFF 15.65
Benchmarks
EV/FCFF, Competitors1
Chevron Corp. 17.87
Exxon Mobil Corp. 15.92
Occidental Petroleum Corp. 13.25
EV/FCFF, Sector
Oil, Gas & Consumable Fuels 16.11
EV/FCFF, Industry
Energy 15.91

Based on: 10-K (reporting date: 2024-12-31).

1 Click competitor name to see calculations.

If the company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.
Otherwise, if the company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.


Enterprise Value to FCFF Ratio, Historical

ConocoPhillips, historical EV/FCFF calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Enterprise value (EV)1 142,203 142,912 139,467 131,808 73,692
Free cash flow to the firm (FCFF)2 8,719 9,292 18,771 12,299 797
Valuation Ratio
EV/FCFF3 16.31 15.38 7.43 10.72 92.48
Benchmarks
EV/FCFF, Competitors4
Chevron Corp. 18.98 14.85 8.27 13.33 106.63
Exxon Mobil Corp. 15.76 12.47 7.84 10.06
Occidental Petroleum Corp. 13.73 11.15 5.95 8.39 25.58
EV/FCFF, Sector
Oil, Gas & Consumable Fuels 16.44 13.39 7.72 10.86 163.02
EV/FCFF, Industry
Energy 16.37 13.70 8.29 11.22 117.62

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 See details »

2 See details »

3 2024 Calculation
EV/FCFF = EV ÷ FCFF
= 142,203 ÷ 8,719 = 16.31

4 Click competitor name to see calculations.


The enterprise value (EV) demonstrates a significant upward trajectory from 2020 through 2023, increasing from approximately $73.7 billion to about $142.9 billion. This marks nearly a doubling of the company's valuation over the four-year period, indicating a substantial growth in market capitalization and overall company valuation. However, there is a slight decrease observed from 2023 to 2024, where EV declines marginally to approximately $142.2 billion.

In terms of free cash flow to the firm (FCFF), there is a substantial increase from 2020 to 2022, with FCFF rising from $797 million to $18.8 billion, reflecting improved cash generation capabilities and operational efficiency. This positive momentum, however, reverses in 2023 and 2024, with FCFF falling to $9.3 billion and $8.7 billion, respectively. The decline in free cash flow during these latter years could suggest challenges in maintaining cash flow growth or increased capital expenditures or operational costs.

Enterprise Value to FCFF Ratio (EV/FCFF)
The EV/FCFF ratio, which indicates valuation relative to free cash flow, exhibits a marked decline from 92.48 in 2020 to 7.43 in 2022. This steep drop reflects that the enterprise value grew at a slower rate than free cash flow or that free cash flow increased substantially relative to enterprise value, potentially signaling improved valuation attractiveness during this period.
Subsequently, the ratio rises to 15.38 in 2023 and 16.31 in 2024, indicating a relative increase in enterprise value compared to free cash flow. This shift may suggest a moderation of cash flow growth compared to company valuation or a potential overvaluation relative to cash generation in those years.

Overall, the data points to a phase of rapid growth in both enterprise value and free cash flow until 2022, followed by stabilization and some decline in cash flow with relatively stable enterprise value. The dynamics of the EV/FCFF ratio reflect changing market perceptions and operational performance, signaling a need for careful monitoring of cash flow generation relative to valuation in the recent years.