Is There an Opportunity in ConocoPhillips After Announcing Major Workforce Cuts?

If you are feeling uncertain about what to do with ConocoPhillips shares right now, you are far from alone. After years of strong returns, the stock has seen momentum reverse, with a 5.5% decline over the past week and an 8.1% slide in the past month. So far in 2025, the stock is down 13.2%, and over the last year, it has shed 15.5%. Yet step back, and the five-year chart tells a whole different story, showing a staggering gain of 223.1%. Those swings can rattle even the most seasoned investor, especially when short-term news and big headlines dominate the conversation.

Recent analyst moves have fueled the debate. Wells Fargo initiated ConocoPhillips with an Equal Weight rating and a $100 price target, citing a bearish mood that might actually be creating opportunities in energy stocks. Meanwhile, OPEC's decision to keep demand forecasts steady and slightly increase oil output has kept the broader energy sector on its toes. There are also company-specific developments to digest, like ConocoPhillips' announcement that it will cut 20-25% of its workforce, which could be seen as a move to shore up efficiency and manage costs under challenging market conditions.

With many moving parts, is ConocoPhillips actually undervalued right now? According to our valuation framework, the company scores a 6 out of 6 for undervaluation, meaning it passes every check we use to spot value. Here is where things get interesting. In the next sections, we will break down the main valuation methods behind that perfect score, and we will also reveal an even smarter way to think about value at the end of this article.

Why ConocoPhillips is lagging behind its peers

Approach 1: ConocoPhillips Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model is a staple for estimating a company’s intrinsic value by projecting its future cash flows and discounting them back to their value today. For ConocoPhillips, this approach uses a two-stage Free Cash Flow to Equity model, where both analyst estimates and reasonable long-term assumptions are applied.

Currently, ConocoPhillips generates $8.6 Billion in Free Cash Flow (FCF), and this figure is projected to steadily grow over the coming years. Analyst forecasts cover up to five years, with Simply Wall St extrapolating further for the long term. Notably, by 2029, FCF is expected to reach $11.3 Billion. This reflects robust growth driven by operational efficiency and strong market presence. By 2035, FCF is projected to rise even further, underscoring the company’s long-term potential.

Using these cash flow projections, the DCF model estimates ConocoPhillips has an intrinsic value of $234.82 per share. This implies the stock is trading at a substantial 63.0% discount relative to its fair value. This suggests the market is significantly undervaluing the company’s future cash generation and earnings ability.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for ConocoPhillips.

Our Discounted Cash Flow (DCF) analysis suggests ConocoPhillips is undervalued by 63.0%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: ConocoPhillips Price vs Earnings (PE)

The Price-to-Earnings (PE) ratio is a popular metric for valuing profitable companies like ConocoPhillips because it shows how much investors are willing to pay for each dollar of current earnings. For companies with reliable profits, the PE ratio helps gauge whether a stock’s price reflects expectations for its future growth and the risks it faces compared to its peers and industry.

Generally, a "normal" or "fair" PE ratio depends on how quickly a company is expected to grow and how much risk investors perceive. Fast-growing, stable companies tend to deserve higher PE ratios than those with flat earnings or higher uncertainty. This context is important when assessing valuation against benchmarks like industry or peer averages.

Currently, ConocoPhillips trades at a PE of 11.9x. This is below the Oil and Gas industry average of 13.1x and also sits under its peer group average of 14.2x. At first glance, this would suggest the stock is trading at a discount to both industry and peers, indicating potential value.

However, Simply Wall St’s Fair Ratio for ConocoPhillips is 19.0x. This proprietary metric is more insightful than a simple industry or peer average because it adjusts for critical factors like the company’s earnings growth, profit margins, risk profile, and overall size. The Fair Ratio considers what a truly appropriate PE should be, rather than just where the group happens to trade right now.

Comparing the Fair Ratio of 19.0x to the current PE of 11.9x shows that ConocoPhillips is trading well below where it should be, given its fundamentals. This implies meaningful undervaluation based on earnings potential and the company’s specific circumstances.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your ConocoPhillips Narrative

Earlier, we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is a story an investor tells about a company by connecting their perspective on market opportunities, risks, and company strategies to their own financial forecast and a calculated fair value for the stock. Narratives help you tie together the “why” behind your valuation, rather than relying only on formulas, by letting you openly state your assumptions for future revenue, margin, and earnings and show how these shape your view of what ConocoPhillips is really worth.

On Simply Wall St’s Community page, Narratives are easy to use and accessible for all investors, from beginners to pros. They are a dynamic tool: your Narrative automatically updates whenever new news, earnings, or analyst data is released, so your fair value assessment always reflects the latest information. This makes it simple to decide whether to buy or sell by comparing your own Fair Value to the current Price at a glance.

For example, some ConocoPhillips Narratives assume global energy demand and new LNG projects will drive robust earnings growth, supporting a bullish view with a price target as high as $137. Others highlight risks from execution and regulatory headwinds, seeing fair value closer to $100. You can see, discuss, and choose which story you believe in, and why.

Do you think there's more to the story for ConocoPhillips? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com