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Exxon Mobil Corp. (NYSE:XOM)

Present Value of Free Cash Flow to the Firm (FCFF)

Microsoft Excel

In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Free cash flow to the firm (FCFF) is generally described as cash flows after direct costs and before any payments to capital suppliers.

Intrinsic Stock Value (Valuation Summary)

Exxon Mobil Corp., free cash flow to the firm (FCFF) forecast

US$ in millions, except per share data

Microsoft Excel
Year Value FCFFt or Terminal value (TVt) Calculation Present value at 9.49%
01 FCFF0 24,873
1 FCFF1 26,652 = 24,873 × (1 + 7.15%) 24,342
2 FCFF2 28,452 = 26,652 × (1 + 6.75%) 23,734
3 FCFF3 30,262 = 28,452 × (1 + 6.36%) 23,055
4 FCFF4 32,067 = 30,262 × (1 + 5.96%) 22,313
5 FCFF5 33,852 = 32,067 × (1 + 5.57%) 21,514
5 Terminal value (TV5) 911,274 = 33,852 × (1 + 5.57%) ÷ (9.49% – 5.57%) 579,135
Intrinsic value of Exxon Mobil Corp. capital 694,093
Less: Debt (fair value) 40,289
Intrinsic value of Exxon Mobil Corp. common stock 653,804
 
Intrinsic value of Exxon Mobil Corp. common stock (per share) $159.00
Current share price $153.04

Based on: 10-K (reporting date: 2025-12-31).

1 See details »

Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.

Weighted Average Cost of Capital (WACC)

Exxon Mobil Corp., cost of capital

Microsoft Excel
Value1 Weight Required rate of return2 Calculation
Equity (fair value) 629,287 0.94 9.94%
Debt (fair value) 40,289 0.06 2.40% = 3.51% × (1 – 31.60%)

Based on: 10-K (reporting date: 2025-12-31).

1 US$ in millions

   Equity (fair value) = No. shares of common stock outstanding × Current share price
= 4,111,911,960 × $153.04
= $629,287,006,358.40

   Debt (fair value). See details »

2 Required rate of return on equity is estimated by using CAPM. See details »

   Required rate of return on debt. See details »

   Required rate of return on debt is after tax.

   Estimated (average) effective income tax rate
= (28.00% + 33.00% + 33.00% + 33.00% + 31.00%) ÷ 5
= 31.60%

WACC = 9.49%

FCFF Growth Rate (g)

FCFF growth rate (g) implied by PRAT model

Exxon Mobil Corp., PRAT model

Microsoft Excel
Average Dec 31, 2025 Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021
Selected Financial Data (US$ in millions)
Interest expense 603 996 849 798 947
Net income attributable to ExxonMobil 28,844 33,680 36,010 55,740 23,040
 
Effective income tax rate (EITR)1 28.00% 33.00% 33.00% 33.00% 31.00%
 
Interest expense, after tax2 434 667 569 535 653
Add: Dividends, common shares 17,231 16,704 14,941 14,939 14,924
Interest expense (after tax) and dividends 17,665 17,371 15,510 15,474 15,577
 
EBIT(1 – EITR)3 29,278 34,347 36,579 56,275 23,693
 
Notes and loans payable 9,296 4,955 4,090 634 4,276
Long-term debt, excluding due within one year 34,241 36,755 37,483 40,559 43,428
Total ExxonMobil share of equity 259,386 263,705 204,802 195,049 168,577
Total capital 302,923 305,415 246,375 236,242 216,281
Financial Ratios
Retention rate (RR)4 0.40 0.49 0.58 0.73 0.34
Return on invested capital (ROIC)5 9.67% 11.25% 14.85% 23.82% 10.95%
Averages
RR 0.51
ROIC 14.11%
 
FCFF growth rate (g)6 7.15%

Based on: 10-K (reporting date: 2025-12-31), 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).

1 See details »

2025 Calculations

2 Interest expense, after tax = Interest expense × (1 – EITR)
= 603 × (1 – 28.00%)
= 434

3 EBIT(1 – EITR) = Net income attributable to ExxonMobil + Interest expense, after tax
= 28,844 + 434
= 29,278

4 RR = [EBIT(1 – EITR) – Interest expense (after tax) and dividends] ÷ EBIT(1 – EITR)
= [29,278 – 17,665] ÷ 29,278
= 0.40

5 ROIC = 100 × EBIT(1 – EITR) ÷ Total capital
= 100 × 29,278 ÷ 302,923
= 9.67%

6 g = RR × ROIC
= 0.51 × 14.11%
= 7.15%

FCFF growth rate (g) implied by single-stage model

g = 100 × (Total capital, fair value0 × WACC – FCFF0) ÷ (Total capital, fair value0 + FCFF0)
= 100 × (669,576 × 9.49% – 24,873) ÷ (669,576 + 24,873)
= 5.57%

where:

Total capital, fair value0 = current fair value of Exxon Mobil Corp. debt and equity (US$ in millions)
FCFF0 = the last year Exxon Mobil Corp. free cash flow to the firm (US$ in millions)
WACC = weighted average cost of Exxon Mobil Corp. capital

FCFF growth rate (g) forecast

Exxon Mobil Corp., H-model

Microsoft Excel
Year Value gt
1 g1 7.15%
2 g2 6.75%
3 g3 6.36%
4 g4 5.96%
5 and thereafter g5 5.57%

where:
g1 is implied by PRAT model
g5 is implied by single-stage model
g2, g3 and g4 are calculated using linear interpolation between g1 and g5

Calculations

g2 = g1 + (g5 – g1) × (2 – 1) ÷ (5 – 1)
= 7.15% + (5.57% – 7.15%) × (2 – 1) ÷ (5 – 1)
= 6.75%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= 7.15% + (5.57% – 7.15%) × (3 – 1) ÷ (5 – 1)
= 6.36%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= 7.15% + (5.57% – 7.15%) × (4 – 1) ÷ (5 – 1)
= 5.96%