EXE Expand Energy
Largest low-cost US gas supplier to the LNG wave — cheap because cyclical, not broken.
The story
Expand Energy is the largest US natural gas producer (Chesapeake-Southwestern merger) with low-cost Haynesville and Appalachian scale positioned to feed Gulf Coast LNG exports and power/data-center demand. Its moat is cost leadership and scale in a commodity where most producers are price takers, so value is cyclical, not secular. It is a mature cash-generating business riding a genuine demand wave, not a franchise with pricing power.
Kept prior drivers: the LNG demand story is intact but the TTM 27.5% margin reflects peak-cycle gas pricing (European gas at 4-year highs), so the 23% mid-cycle target stands rather than chasing the top. Actual sales-to-capital of 0.58 validates the 0.6 reinvestment assumption, and 2% terminal growth (inflation-like, well below the 4.97% risk-free rate) fits a volume-flat commodity producer. The 7-year horizon captures the LNG ramp without granting a durable excess-return franchise to a price taker.
Value drivers
| Revenue growth (Y1) | 5.0% |
| Terminal growth | 2.0% |
| Forecast horizon | 7y |
| Target operating margin | 23.0% |
| Years to target margin | 7 |
| Sales-to-capital | 0.60 |
| Beta | 1.25 |
| Failure probability | 3.0% |
| Cost of capital (WACC) | 9.6% |
| Terminal WACC | 8.7% |
Valuation bridge
| PV of explicit FCFF | 11.06B |
| PV of terminal value | 21.50B |
| Equity value | 27.32B |
| ÷ shares → per share | $114.22 |
News
score · 8 articles
- European Natural Gas Surges to 4-Year High, Lifting These Energy Stocks
- Expand Energy Positioned for Gulf Coast Demand Growth, Twin Eagle Value, RBC Says
- 2 Cash-Producing Stocks to Research Further and 1 We Turn Down
- 3 Reasons We’re Fans of Expand Energy (EXE)
- Why Is Expand Energy (EXE) Up 4.5% Since Last Earnings Report?
- Expand Energy (EXE) is Building a Natural Gas Powerhouse. But is the Growth Story at Risk?
- Expand Energy Stock Outlook: Is Wall Street Bullish or Bearish?
- 2 Growth Stocks to Add to Your Roster and 1 We Avoid
Projected free cash flow to the firm
| Yr | Revenue | Growth | Margin | NOPAT | Reinvest | FCFF | PV |
|---|---|---|---|---|---|---|---|
| 1 | 14.35B | 5.0% | 26.8% | 3.07B | 1.14B | 1.93B | 1.76B |
| 2 | 14.99B | 4.5% | 26.2% | 3.13B | 1.08B | 2.05B | 1.71B |
| 3 | 15.59B | 4.0% | 25.5% | 3.18B | 999.59M | 2.18B | 1.65B |
| 4 | 16.14B | 3.5% | 24.9% | 3.20B | 909.63M | 2.30B | 1.59B |
| 5 | 16.62B | 3.0% | 24.3% | 3.22B | 806.97M | 2.41B | 1.52B |
| 6 | 17.04B | 2.5% | 23.6% | 3.21B | 692.65M | 2.52B | 1.45B |
| 7 | 17.38B | 2.0% | 23.0% | 3.19B | 567.97M | 2.62B | 1.38B |
Key risks
- Natural gas price mean reversion as supply responds to 4-year-high prices
- LNG project delays or permitting setbacks deferring Gulf Coast demand
- Merger-related debt and execution risk in integrating Southwestern
Catalysts
- European and Asian LNG demand surge lifting Henry Hub realizations
- Gulf Coast LNG terminal ramp and power/data-center gas demand growth