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BP p.l.c.
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=== DCF === Units are in $ millions. {| class="wikitable" |'''Units ($m)''' |'''2023''' |'''2024''' |'''2025''' |'''2026''' |'''2027''' |'''2028''' |'''2029''' |'''2030''' |'''2031''' |'''2032''' |- | '''FCF''' |'''25,351.15''' |'''15,847.60''' |'''16,411.76''' |'''14,908.14''' |'''15,390.58''' |'''13,804.90''' |'''14,204.97''' |'''12,536.66''' |'''12,853.86''' |'''11,102.46''' |- |Discount Factor |0.9783 |0.9248 |0.8741 |0.8262 |0.7810 |0.7382 |0.6978 |0.6596 |0.6234 |0.5893 |- |'''Present Value of FCF''' |'''24,801.88''' |'''14,655.09''' |'''14,345.57''' |'''12,317.54''' |'''12,019.69''' |'''10,190.83''' |'''9,911.85''' |'''8,268.64''' |'''8,013.52''' |'''6,542.55''' |} The effective tax rate used in all calculations was set at 44%, the terminal growth rate was set at 2.3%, equivalent to the annual FTSE 100 rate of return. The following table shows the result of the 10 year DCF valuation of bp. {| class="wikitable" |+DCF | '''Growth Rate''' |'''2.3%''' |- | '''Terminal Value''' |'''325,041.40''' |- |'''Present Value of Terminal Value''' |'''191,543.05''' |- |'''Enterprise Value''' |'''312,610.21''' |- |'''Equity Value''' |'''281,496.21''' |- |'''Share Price''' |'''$ 16.30''' |} The DCF calculation results in an implied share price of $16.30, indicating that the company and stock is undervalued. There is a potential upside of 103%, or an annualised share price gain of 10.3%. The following table shows a sensitivity analysis carried out to show share price behaviour in a range of WACC and growth rate environments. {| class="wikitable" |+Sensitivity Analysis |'''$ 16.30''' | colspan="10" |'''WACC''' |- | rowspan="8" |'''Growth Rate''' | |'''4.0%''' |'''4.5%''' |'''5.0%''' |'''5.5%''' |'''6.0%''' |'''6.5%''' |'''7.0%''' |'''7.5%''' |'''8.0%''' |- |'''1.0%''' |$ 20.67 |$ 17.83 |$ 15.68 |$ 14.01 |$ 12.67 |$ 11.57 |$ 10.65 |$ 9.86 |$ 9.19 |- |'''1.5%''' |$ 23.76 |$ 19.94 |$ 17.21 |$ 15.15 |$ 13.55 |$ 12.26 |$ 11.20 |$ 10.31 |$ 9.56 |- |'''2.0%''' |$ 28.38 |$ 22.90 |$ 19.24 |$ 16.62 |$ 14.64 |$ 13.10 |$ 11.86 |$ 10.84 |$ 9.99 |- |'''2.5%''' |$ 36.09 |$ 27.35 |$ 22.09 |$ 18.57 |$ 16.05 |$ 14.15 |$ 12.67 |$ 11.48 |$ 10.50 |- |'''3.0%''' |$ 51.51 |$ 34.75 |$ 26.36 |$ 21.31 |$ 17.93 |$ 15.51 |$ 13.68 |$ 12.26 |$ 11.11 |- |'''3.5%''' |$ 97.78 |$ 49.57 |$ 33.47 |$ 25.41 |$ 20.56 |$ 17.31 |$ 14.98 |$ 13.23 |$ 11.86 |- |'''4.0%''' | - |$ 94.01 |$ 47.70 |$ 32.25 |$ 24.50 |$ 19.84 |$ 16.72 |$ 14.48 |$ 12.80 |}
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