Diamondback Energy, Inc. (FANG) Stock Valuation — DCF Analysis
Oil & Gas Exploration & Production · NASDAQ
Current Price
$192.13
Intrinsic Value
$167.38
-14.8% margin of safety
COMPETITIVE MOAT
↑Permian Basin Expertise
Diamondback possesses deep operational knowledge and infrastructure within the prolific Permian Basin. This allows for efficient extraction and cost advantages in a highly competitive region.
↑Scale and Efficiency
The company's significant production scale and focus on operational efficiency contribute to lower per-barrel costs. This provides a competitive edge, especially during periods of price volatility.
↑Strategic Acquisitions
Diamondback has a history of successfully integrating acquired assets. This strategy allows them to expand their acreage and production base, enhancing their market position.
INVESTMENT RISKS
↓Commodity Price Volatility
Oil and gas prices are inherently volatile and subject to global supply and demand dynamics. Significant price drops can severely impact profitability and cash flows.
↓Regulatory and Environmental Scrutiny
The oil and gas industry faces increasing regulatory and environmental pressures. Stricter regulations can lead to higher operating costs and potential project delays.
↓Competition in Permian
The Permian Basin is a highly competitive area with many large players, including ExxonMobil. Intense competition can drive up acquisition costs and pressure margins.
Base case
FANG base case valuation
A base case discounted cash flow model for FANG estimates an intrinsic value of about $167.38 per share, against a current price of $192.13. The model assumes 6.1% annual free cash flow growth, a 10.0% discount rate, and a 30x exit multiple.
Intrinsic Value
$167.38
Margin of safety
-14.8%
Expected annual return
-2.7%
Base case assumptions: 6.1% annual growth, 10.0% discount rate, 30x exit multiple, 5 year projection. Data as of 2026-06-12.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the FANG valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for Diamondback Energy, Inc. respond.
Open DCF Calculator for FANGCompany Overview
Diamondback Energy, Inc. operates as an independent enterprise focused on oil and natural gas. Its core business involves the acquisition, development, exploration, and production of unconventional and onshore hydrocarbon reserves, predominantly located within the Permian Basin across West Texas and New Mexico. The company's development efforts primarily target significant geological formations, including the Spraberry and Wolfcamp in the Midland Basin, as well as the Wolfcamp and Bone Spring within the Delaware Basin – both crucial components of the broader Permian. As of December 31, 2021, Diamondback Energy's asset base included approximately 524,700 gross acres under its control in the Permian Basin. At that time, its estimated proved oil and natural gas reserves amounted to 1,788,991 thousand barrels of crude oil equivalent. The company also maintained working interests in 5,289 gross producing wells and held royalty interests in an additional 6,455 wells. Beyond its direct well operations, Diamondback Energy possesses mineral interests spanning roughly 930,871 gross acres and 27,027 net royalty acres across the Permian Basin and the Eagle Ford Shale. Furthermore, it manages a portfolio of midstream infrastructure, owning, operating, developing, and acquiring assets such as 866 miles of crude oil gathering pipelines, natural gas gathering pipelines, and an integrated water system within the Midland and Delaware Basins of the Permian. Established in 2007, Diamondback Energy, Inc. is headquartered in Midland, Texas.
Financial Metrics — FANG Stock Valuation Data
Revenue/Share (TTM)
$53.72
FCF/Share (TTM)
$5.63
ROIC (TTM)
5.1%
ROE (TTM)
1.1%
P/FCF
34.0x
EV/EBITDA
12.5x
FCF Yield
2.95%
Debt/Equity
0.38x
Based on trailing twelve-month data, FANG shows a free cash flow per share of $5.63 and a ROIC of 5.1%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 34.0x and FCF yield of 2.95% are important context metrics when evaluating FANG's stock valuation relative to peers.
Frequently Asked Questions
What is the intrinsic value of FANG?
Diamondback Energy, Inc. currently generates $5.63 in free cash flow per share. At the current price of $192.13, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is FANG undervalued?
FANG trades at a P/FCF ratio of 34.0x with a free cash flow yield of 2.95%. This P/FCF is in a moderate range. However, whether FANG is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value FANG stock using DCF?
To perform a DCF valuation on Diamondback Energy, Inc.: (1) Start with the trailing free cash flow per share ($5.63) as the base, (2) project future FCF growth over 5-10 years based on Oil & Gas Exploration & Production industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting FANG's risk profile — with a debt-to-equity of 0.38x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to FANG?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Diamondback Energy, Inc., this means projecting how much free cash flow the company will produce over the next 5-10 years, shaped by Oil & Gas Exploration & Production trends, then discounting those amounts to today's dollars. FANG's ROIC of 5.1% suggests the company may face challenges generating returns above its cost of capital.
How does WACC affect FANG stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For FANG, with a debt-to-equity ratio of 0.38x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 12.5x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See FANG PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Energy valuationsDCF and P/E value FANG with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-06-12. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.