ConocoPhillips (COP): Valuation Update Following Dividend Hike and Raised Production Guidance

ConocoPhillips (COP) just posted quarterly results that surpassed analyst estimates, due to higher oil and gas production as well as effective cost controls. The company also raised its full-year production guidance and increased its quarterly dividend by 8%.

See our latest analysis for ConocoPhillips.

Despite the solid operational results and dividend boost, ConocoPhillips’ share price has struggled to find momentum this year, with a year-to-date share price return of -13.2% and a 1-year total shareholder return of -20.2%. Even so, management’s confidence in raising production and dividends, along with ongoing buybacks, highlights their focus on long-term value as the oil and gas sector weathers commodity price swings and project cost pressures.

If you’re looking to broaden your search beyond energy giants, now’s a great opportunity to discover fast growing stocks with high insider ownership

With all this momentum, the key question for investors is whether ConocoPhillips’ recent weakness represents a bargain or if the market has already priced in further growth and operational gains.

Most Popular Narrative: 23.7% Undervalued

Compared to its last close at $86.83, the most popular market narrative assigns a fair value of $113.78 for ConocoPhillips. This fair value highlights a substantial gap and reflects expectations of future margin expansion and project-driven growth, setting the stage for a deeper dive into the underlying financial assumptions.

Strong global energy demand growth, particularly from emerging markets, and underinvestment in new oil and gas supply support an increasingly tight market. These factors underpin ConocoPhillips' forward revenue and pricing power as a large, efficient producer. The company's expanding LNG portfolio and progress on large-scale liquefaction projects (notably in Qatar, Port Arthur, and Willow) are set to capture significant market share from robust global gas demand, especially as natural gas solidifies its role as a "transition fuel." These projects are expected to drive a substantial free cash flow inflection and topline revenue expansion through 2029.

Read the complete narrative.

An ambitious fair value underpinned by big numbers. Curious what blend of margin improvements, project launches, and market power drive this valuation upswing? There are crucial growth and profit forecasts at play, some aggressive, some controversial. Click through to see exactly what assumptions are fueling these expectations.

Result: Fair Value of $113.78 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

Story Continues

However, execution risks on large capital projects and ongoing macroeconomic uncertainty could easily cap near-term upside, despite bullish forecasts and growth ambitions.

Find out about the key risks to this ConocoPhillips narrative.

Build Your Own ConocoPhillips Narrative

If you see things differently or want to dig into the details for yourself, it takes less than three minutes to craft your own view. Do it your way

A great starting point for your ConocoPhillips research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

Looking for more investment ideas?

Smart investors never settle for just one opportunity. Supercharge your portfolio by following the momentum and gaining an edge with strategies the market often overlooks.

Tap into tech’s hottest trend and ride the wave by checking out these 24 AI penny stocks making breakthroughs in artificial intelligence and automation. Maximize income potential by reviewing these 16 dividend stocks with yields > 3% with rock-solid yields for steady cash flow year after year. Catch the undervalued gems before the crowd by selecting these 870 undervalued stocks based on cash flows poised for strong gains based on intrinsic value.

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.

Companies discussed in this article include COP.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

View Comments