Hess Corporation (HES) Intrinsic Value & DCF Valuation
Oil & Gas Exploration & Production · NYSE
Current Price
$148.97
Intrinsic Value
Outside reliable range
What Is Hess Corporation's Intrinsic Value?
The base-case DCF model produces an intrinsic value estimate for Hess Corporation (HES) that falls outside its reliable range, so treat any single number with extra caution. This usually happens with unusual cash flow patterns or rapid recent changes in the business.
How the DCF works · Recalculate with your own assumptions · What is intrinsic value?
Is Hess Corporation (HES) Undervalued?
Because the model output for HES is outside the reliable range, no undervalued or overvalued read is given here. Use the calculator below to test your own assumptions instead.
COMPETITIVE MOAT
↑Strategic Bakken Acreage
Hess possesses significant, high-quality acreage in the Bakken shale play. This concentration of resources provides a cost advantage and operational efficiencies.
↑Hess Midstream Infrastructure
The company benefits from its ownership in Hess Midstream, which offers integrated infrastructure. This provides reliable takeaway capacity and fee-based revenue streams.
↑Chevron Partnership
The strategic partnership with Chevron, particularly in Guyana, offers access to capital and expertise. This collaboration de-risks large-scale offshore projects.
INVESTMENT RISKS
↓Guyana Project Execution
The success of Hess's significant investments in Guyana is crucial. Any delays or cost overruns in these large offshore projects pose a substantial risk.
↓Regulatory and Environmental Scrutiny
The oil and gas industry faces increasing regulatory and environmental scrutiny. Changes in policy or stricter regulations could impact Hess's operations and profitability.
↓Geopolitical Instability
Operations in certain regions, like Guyana, can be subject to geopolitical risks. Political instability or changes in government policies could affect Hess's assets and future development.
Base case
HES base case valuation
Base case assumptions: 16.3% annual growth, 10.0% discount rate, 30x exit multiple, 5 year projection. Data as of 2025-07-18.
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 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)
$42.02
FCF/Share (TTM)
$2.13
ROIC (TTM)
14.4%
ROE (TTM)
27.4%
P/FCF
70.4x
EV/EBITDA
7.5x
FCF Yield
1.42%
Debt/Equity
0.84x
Based on trailing twelve-month data, HES shows a free cash flow per share of $2.13 and a ROIC of 14.4%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 70.4x and FCF yield of 1.42% are important context metrics when evaluating HES's stock valuation relative to peers.
Frequently Asked Questions
What is the intrinsic value of HES?
Hess Corporation currently generates $2.13 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 trades at a P/FCF ratio of 70.4x with a free cash flow yield of 1.42%. A high P/FCF means investors are paying more per dollar of free cash flow, which usually reflects expectations of future growth. However, whether HES 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 HES stock using DCF?
To perform a DCF valuation on Hess Corporation: (1) Start with the trailing free cash flow per share ($2.13) 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 0.84x, 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 14.4% shows moderate capital returns.
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 0.84x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 7.5x, 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 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.