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Valuation Models: ConocoPhilips

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Company: ConocoPhillips

Initiative to shareholders: "Through our investments, we are continuing to increase our emphasis on exploration and production, to which 86 percent of our capital program was dedicated during 2010, with 89 percent planned for 2011."

Annual Report - 2010

Justify the current market price of ConocoPhillips using the 3 valuation models: CAPM, PEG, and DDM.

Show calculations to support findings, including rates of return.

Which model best support the findings?

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Solution Summary

This solution shows how to use the capital asset pricing model (CAPM), price/earnings to growth (PEG), and dividend discount model (DDM) valuation models to justify the 2010 market price of ConocoPhillips.

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** Please see the attached file for the complete solution response **

Valuation of ConocoPhillips Share Price
Current market price of ConocoPhillips=$66.90
Return on equity=16.97%
Earnings per share=$7.68
Payout ratio=30%
Risk free rate (return on 3-month T-bill)=0%
S&P 500 (Market rate of return) ...

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  • MBA, Indian Institute of Finance
  • Bsc, Madras University
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