Diamondback Energy is a strong Permian pure-play E&P with robust free cash flow generation at mid-cycle prices, though it remains inherently exposed to commodity cyclicality. Fair value range: low $92.1, high $213, with mid-point at $152.
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§1 الملخص التنفيذي
Fair value of $152.45 relies on a composite of normalized FCFF DCF ($111.85) and Owner Earnings ($193.04).
Current valuation relies heavily on peak spot commodity prices rather than normalized 35% mid-cycle margins.
A 12x terminal multiple appropriately caps mature growth expectations for this highly cyclical E&P.
Fair value
$152
Margin of safety
-34.0%
Confidence
72/100
Moat
3/10
Educational research only - not investment advice, an offer, or a trade instruction. Confirm current data and do your own due diligence before acting.
$204.33Price
Low $92.09
Mid $152.45
High $212.81
Diamondback Energy is a strong Permian pure-play E&P with robust free cash flow generation at mid-cycle prices, though it remains inherently exposed to commodity cyclicality.
FANG (FANG)'s intrinsic value is triangulated from discounted earnings at two cost-of-equity levels (strict CAPM with raw beta, moderate with adjusted beta), with owner earnings used as a floor for high-growth names.
Each model produces a per-share value; the composite range comes from a weighted blend driven by the archetype's model-applicability matrix. Cost of equity, terminal growth, and the deceleration curve are documented in the assumption ledger.
EPS-based models are discounted at cost of equity; FCFF models use WACC and then subtract net debt to bridge enterprise value to equity value. Each model is labelled with its discount-rate convention so the reader can verify the bridge.
Owner earnings (Buffett's definition) is net income plus depreciation and amortization minus maintenance capex. We do not subtract stock-based compensation again because net income already includes it; dilution is tracked separately via share-count growth.
FAQ
FANG — frequently asked questions
Based on our latest analysis, FANG looks meaningfully overvalued. The current price is $204 versus a composite fair-value midpoint of $152 (range $92.1–$213), which implies roughly 25.4% downside to the midpoint.
Our composite fair-value range for FANG is $92.1–$213, with a midpoint of $152. The range is triangulated across multiple valuation models (discounted earnings, forward earnings scenarios, peer multiples, and where applicable owner earnings or reverse DCF) and weighted by reliability for FANG's archetype.
Our current rating for FANG is Sell with a confidence score of 72/100. Sell. The stock is severely disconnected from mid-cycle fundamental realities, requiring peak conditions to justify the current valuation. This is research for educational purposes, not personalized investment advice.
The top risks our latest report flags for FANG are: Severe Commodity Downcycle; Cost Inflation Squeeze; M&A Integration Failure. The single biggest risk is Severe Commodity Downcycle: Global demand destruction pushes crude below $60/bbl structurally, eliminating free cash flow generation.
Our current rating for FANG is Sell, issued with a confidence score of 72/100 and a moat score of 3/10. The rating reflects the composite fair-value range ($92.1–$213) versus the current price of $204.
FANG is classified as a cyclical stock. Archetype determines how every downstream parameter — discount rate, terminal growth, deceleration curve, terminal multiple, scenario probability weights, scorecard weights, and which valuation models are prioritized — is calibrated for FANG.
