As of July 18, 2023, EOG Resources Inc (EOG, Financial) witnessed a stock price change of 3.45%, with the price per share standing at $122.77. The company's market capitalization is $71.8 billion, and its earnings per share (EPS) is $15.99. The GF Value of EOG Resources, a unique measure of the stock's intrinsic worth, is currently $124.08, indicating that the stock is fairly valued.
EOG Resources is a prominent oil and gas producer with significant acreage across various U.S. shale plays, including the Permian Basin, the Eagle Ford, and the Bakken. As of the end of 2022, it reported net proved reserves of 4.2 billion barrels of oil equivalent. The company's net production averaged 90 thousand barrels of oil equivalent per day in 2021, with a ratio of 73% oil and natural gas liquids to 27% natural gas.
GF Value and Stock Valuation
According to the GuruFocus Value calculation, EOG Resources (EOG, Financial) is fairly valued. The calculation is based on historical trading multiples, past business growth, and analyst estimates of future business performance. A stock is considered overvalued if its price is significantly above the GF Value Line, implying poor future returns. Conversely, if the price is significantly below the GF Value Line, higher future returns are expected. Given the current price of EOG Resources and its market cap, it appears to be fairly valued.
Since EOG Resources is fairly valued, the long-term return of its stock is likely to align with its business growth rate.
Financial Strength
Investing in companies with low financial strength could result in permanent capital loss. Therefore, it's crucial to review a company’s financial strength before investing. EOG Resources has a cash-to-debt ratio of 1.2, ranking better than 60.14% of companies in the Oil & Gas industry. Based on this, GuruFocus ranks EOG Resources’s financial strength as 8 out of 10, indicating a strong balance sheet.
Profitability
Investing in profitable companies, especially those with consistent profitability over the long term, is generally less risky. EOG Resources, with its high operating margin of 45.98% and a revenue of $28.3 billion in the past twelve months, ranks better than 84.77% of companies in the Oil & Gas industry. Overall, the profitability of EOG Resources is ranked 9 out of 10, indicating strong profitability.
Growth
Growth is a crucial factor in the valuation of a company. EOG Resources has a 3-year average annual revenue growth rate of 19.9%, ranking better than 70.39% of companies in the Oil & Gas industry. The 3-year average EBITDA growth rate is 21.7%, ranking better than 59.66% of companies in the industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) and the weighted cost of capital (WACC) can provide insights into its profitability. EOG Resources’s ROIC is 31.59, and its cost of capital is 8.76, indicating the company's ability to generate cash flow relative to the capital it has invested in its business.
Conclusion
In conclusion, EOG Resources (EOG, Financial) is estimated to be fairly valued. The company's financial condition is strong, and its profitability is robust. Its growth ranks better than 59.66% of companies in the Oil & Gas industry. To learn more about EOG Resources stock, you can check out its 30-Year Financials here.
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