Stock Analysis on Net
Stock Analysis on Net

Texas Pacific Land Corp. (NYSE:TPL)

This company has been moved to the archive! The financial data has not been updated since November 6, 2024.

Present Value of Free Cash Flow to Equity (FCFE)

Microsoft Excel

In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Free cash flow to equity (FCFE) is generally described as cash flows available to the equity holder after payments to debt holders and after allowing for expenditures to maintain the company asset base.

Intrinsic Stock Value (Valuation Summary)

Texas Pacific Land Corp., free cash flow to equity (FCFE) forecast

US$ in thousands, except per share data

Microsoft Excel
Year Value FCFEt or Terminal value (TVt) Calculation Present value at 20.54%
01 FCFE0 403,265
1 FCFE1 501,535 = 403,265 × (1 + 24.37%) 416,086
2 FCFE2 616,979 = 501,535 × (1 + 23.02%) 424,651
3 FCFE3 750,662 = 616,979 × (1 + 21.67%) 428,635
4 FCFE4 903,172 = 750,662 × (1 + 20.32%) 427,853
5 FCFE5 1,074,469 = 903,172 × (1 + 18.97%) 422,279
5 Terminal value (TV5) 81,392,575 = 1,074,469 × (1 + 18.97%) ÷ (20.54% – 18.97%) 31,988,237
Intrinsic value of Texas Pacific Land Corp. common stock 34,107,741
 
Intrinsic value of Texas Pacific Land Corp. common stock (per share) $1,484.56
Current share price $1,329.62

Based on: 10-K (reporting date: 2023-12-31).

1 See details »

Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.

Required Rate of Return (r)

Microsoft Excel
Assumptions
Rate of return on LT Treasury Composite1 RF 4.70%
Expected rate of return on market portfolio2 E(RM) 14.45%
Systematic risk of Texas Pacific Land Corp. common stock βTPL 1.62
 
Required rate of return on Texas Pacific Land Corp. common stock3 rTPL 20.54%

1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

2 See details »

3 rTPL = RF + βTPL [E(RM) – RF]
= 4.70% + 1.62 [14.45% – 4.70%]
= 20.54%

FCFE Growth Rate (g)

FCFE growth rate (g) implied by PRAT model

Texas Pacific Land Corp., PRAT model

Microsoft Excel
Average Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Selected Financial Data (US$ in thousands)
Regular dividends paid and accrued 99,972 247,479 85,264 201,660 46,546
Net income 405,645 446,362 269,980 176,049 318,728
Revenues 631,595 667,422 450,958 302,554 490,496
Total assets 1,156,398 877,427 764,064 571,635 598,176
Total equity 1,043,196 772,887 651,711 485,184 512,137
Financial Ratios
Retention rate1 0.75 0.45 0.68 -0.15 0.85
Profit margin2 64.23% 66.88% 59.87% 58.19% 64.98%
Asset turnover3 0.55 0.76 0.59 0.53 0.82
Financial leverage4 1.11 1.14 1.17 1.18 1.17
Averages
Retention rate 0.52
Profit margin 62.83%
Asset turnover 0.65
Financial leverage 1.15
 
FCFE growth rate (g)5 24.37%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 Retention rate = (Net income – Regular dividends paid and accrued) ÷ Net income
= (405,645 – 99,972) ÷ 405,645
= 0.75

2 Profit margin = 100 × Net income ÷ Revenues
= 100 × 405,645 ÷ 631,595
= 64.23%

3 Asset turnover = Revenues ÷ Total assets
= 631,595 ÷ 1,156,398
= 0.55

4 Financial leverage = Total assets ÷ Total equity
= 1,156,398 ÷ 1,043,196
= 1.11

5 g = Retention rate × Profit margin × Asset turnover × Financial leverage
= 0.52 × 62.83% × 0.65 × 1.15
= 24.37%

FCFE growth rate (g) implied by single-stage model

g = 100 × (Equity market value0 × r – FCFE0) ÷ (Equity market value0 + FCFE0)
= 100 × (30,547,905 × 20.54% – 403,265) ÷ (30,547,905 + 403,265)
= 18.97%

where:
Equity market value0 = current market value of Texas Pacific Land Corp. common stock (US$ in thousands)
FCFE0 = the last year Texas Pacific Land Corp. free cash flow to equity (US$ in thousands)
r = required rate of return on Texas Pacific Land Corp. common stock

FCFE growth rate (g) forecast

Texas Pacific Land Corp., H-model

Microsoft Excel
Year Value gt
1 g1 24.37%
2 g2 23.02%
3 g3 21.67%
4 g4 20.32%
5 and thereafter g5 18.97%

where:
g1 is implied by PRAT model
g5 is implied by single-stage model
g2, g3 and g4 are calculated using linear interpoltion between g1 and g5

Calculations

g2 = g1 + (g5 – g1) × (2 – 1) ÷ (5 – 1)
= 24.37% + (18.97% – 24.37%) × (2 – 1) ÷ (5 – 1)
= 23.02%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= 24.37% + (18.97% – 24.37%) × (3 – 1) ÷ (5 – 1)
= 21.67%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= 24.37% + (18.97% – 24.37%) × (4 – 1) ÷ (5 – 1)
= 20.32%