Current Developments Surrounding EOG's Share Price
A natural resources company focusing on crude oil and natural gas production, EOG Resources (NYSE: EOG), has had little movement in its stock price so far this year, contrasting with the 23% rise of the S&P 500. Fellow oil giant, Chevron Corporation (NYSE: CVX), and another competitor's shares are also essentially stagnant this year. Wondering about the future of ConocoPhillips stock?
What's going on with EOG's shares?
The company operates a capital-intensive business model that is heavily influenced by market cycles. Recent fluctuations in EOG's stock price can be attributed to the broader economic trends and less-than-impressive earnings reports. In the near term, EOG's stock might continue to bob along, as its performance is largely contingent on commodity prices. Although there are expectations of economic recovery and growth-promoting policies under the current U.S. administration, oil prices have remained stable. The rising U.S. dollar and high domestic oil production have had a negative impact on the commodity's value. EOG plans to increase its total debt balance between $5 to $6 billion over the next 12 to 18 months. Investors should keep a close eye on the company's debt levels, as potential increases in interest rates may pose a challenge. EOG currently has an earnings multiple of approximately 10x, which is lower than its own 5-year average of approximately 13x. In the long run, we anticipate the company to benefit from increased production of crude oil and natural gas liquids, notably from Delaware and anticipated contributions from Dorado and Utica. However, if you're seeking growth with less volatility, consider the *Top Performers portfolio*.
EOG surpassed expectations in its third-quarter earnings. Its non-GAAP EPS of $2.89 outperformed the estimated $2.77, while revenue of $6.0 billion, a modest $20 million above the previous year's figure, also beat projections. The company's GAAP earnings were $1.67 billion, or $2.95 per share, compared to $2.03 billion, or $3.48 per share, in Q3 of the previous year. EOG's management team offset lower revenue by announcing shareholder-friendly initiatives. The company hiked its dividend by 7% and increased its share buyback authorization by $5 billion. EOG's crude oil production increased by over 7% year-over-year (y-o-y) to 1.07 million boe/day, while its natural gas liquids production rose by 10% to 254k barrels of oil equivalent per day (boe/day). For insights on a company that excelled financially in the last quarter, take a look at What’s Up with Mastercard Stock?
EOG is on track to surpass not only its minimum cash return commitment of 70% of annual free cash flow but also its cash return from the previous year. During Q3, its average crude oil price fell 8% to $76.95 per barrel and its average natural gas price dropped 30% to $1.84 per Mcf. EOG's crude oil and condensate volumes increased 3% in Q3 to 493K boe/day from the previous year.
EOG's stock price growth over the past 3 years has seen significant variation, with annual returns being less consistent than the S&P 500. In 2021, the stock returned 89%, while in 2022, it returned 57%. In contrast, the *Top Performers portfolio, comprising 30 stocks, has been more stable. It has outperformed the S&P 500 every year over this period. What drives this discrepancy?* The Top Performers portfolio delivers better returns with reduced risk compared to the benchmark index, as shown by the portfolio's performance metrics.
We forecast *EOG's Revenue to reach $19.5 billion for the 2024 fiscal year, a 12% increase from the previous year. Regarding the bottom line, we now project EPS to come in at $11.49. Based on our revised revenue and earnings forecast, we have adjusted EOG's Valuation* to approximately $135 per share, representing a 14% premium over its current market price (Dec 19).
It's enlightening to see how other competitors measure up. EOG Resources Peers offers a comparison of EOG shares compared to its competitors on vital metrics. Discover other comparisons for various companies in different industries at Competitor Comparisons.
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EOG's Q3 earnings exceeded expectations, with a non-GAAP EPS of $2.89 and revenue of $6.0 billion, both surpassing projections. However, the company's earnings multiple of approximately 10x is lower than its 5-year average of approximately 13x, indicating a potential undervaluation in EOG valuation based on its historical earnings multiple.
EOG's third-quarter revenue was attributed mainly to its crude oil production, which increased by over 7% year-over-year, and natural gas liquids production, which rose by 10%. Despite the positive earnings and production figures, the company's eog resources revenue and eog valuation will be influenced by various factors in the near and long term, including commodity prices, economic trends, and debt levels.
