Hess Corporation (HES) Stock Valuation — DCF Analysis
Oil & Gas Exploration & Production · NYSE
Current Price
$148.97
Intrinsic Value
Use the calculator below to estimate
COMPETITIVE MOAT
↑Chevron Partnership
Hess Midstream's fee-based contracts are backed by Chevron, providing a stable revenue stream through 2033. This partnership offers significant financial security and predictability.
↑Midstream Infrastructure
Hess Midstream operates critical infrastructure for oil and gas transportation and processing. This essential network creates a barrier to entry for competitors in its operating regions.
↑Royalty Cash Flow
The acquisition of royalty interests, like the one on a large-scale iron ore source, establishes near-term royalty cash flow. This diversifies revenue and provides a steady income stream.
INVESTMENT RISKS
↓Commodity Price Volatility
As an oil and gas exploration and production company, Hess is exposed to fluctuations in global energy prices. Significant price drops can impact profitability and investment.
↓Regulatory Environment
The oil and gas industry faces evolving environmental regulations and permitting challenges. Changes in policy can increase operational costs and delay projects.
↓Geopolitical Instability
Operations in certain regions are subject to geopolitical risks. Political unrest or international conflicts can disrupt supply chains and impact production.
Customize the HES valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for Hess Corporation respond.
Open DCF Calculator for HESCompany Overview
Hess Corporation is an integrated energy company involved in the entire lifecycle of hydrocarbon assets. Its core business includes the exploration, development, production, acquisition, transportation, and sale of crude oil, natural gas liquids (NGLs), and natural gas. The firm's activities are organized into two primary divisions: Exploration and Production (E&P) and Midstream. Hess conducts production operations across the United States, Guyana, the Malaysia/Thailand Joint Development Area, and Malaysia. Simultaneously, its exploration ventures are focused offshore Guyana, within the U.S. Gulf of Mexico, and off the coasts of Suriname and Canada. Complementing its E&P efforts, the company's Midstream segment handles the gathering, compression, and processing of natural gas, along with NGL fractionation. It also manages the collection, storage, loading, and rail transport of crude oil and NGLs, in addition to propane storage and terminaling. These midstream services further encompass water handling, predominantly in the Bakken Shale region of North Dakota's Williston Basin. As of December 31, 2021, Hess reported proven reserves totaling 1,309 million barrels of oil equivalent. The company was established in 1920 and its corporate headquarters are located in New York, New York.
Financial Metrics — HES Stock Valuation Data
Revenue/Share (TTM)
$19.70
FCF/Share (TTM)
$-0.18
ROIC (TTM)
6.8%
ROE (TTM)
8.5%
P/FCF
n/m
EV/EBITDA
17.3x
FCF Yield
-0.12%
Debt/Equity
0.82x
HES currently has negative free cash flow, so cash-flow ratios such as P/FCF and FCF yield do not give a meaningful read on whether the stock is cheap or expensive. A DCF valuation is unreliable until cash generation turns positive — focus on the path to profitability instead.
Frequently Asked Questions
What is the intrinsic value of HES?
Hess Corporation currently generates $-0.18 in free cash flow per share. At the current price of $148.97, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is HES undervalued?
HES currently has negative free cash flow, so its P/FCF ratio is not meaningful and cannot tell you whether the stock is cheap or expensive. With cash flow negative, a DCF-based undervalued or overvalued judgment is unreliable — look at the path back to positive cash generation instead.
How do I value HES stock using DCF?
To perform a DCF valuation on Hess Corporation: (1) Start with the trailing free cash flow per share ($-0.18) 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 HES's risk profile — with a debt-to-equity of 0.82x, 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 HES?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Hess Corporation, 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. HES's ROIC of 6.8% suggests the company may face challenges generating returns above its cost of capital.
How does WACC affect HES stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For HES, with a debt-to-equity ratio of 0.82x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 17.3x, 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 HES 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 HES with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2025-07-18. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.