EOG Resources is set to announce its fiscal first-quarter results on May 3, with expectations of little to no movement in the stock price despite potentially beating revenue estimates and falling short of earnings expectations. The company continues to return capital to shareholders, grow cash flows, and drive efficiency gains, with operating cash flow reaching $11.3 billion in 2023. EOG’s organic growth strategy and low breakeven costs allow it to generate significant free cash flow, with $5.1 billion generated in 2023. The company plans to continue drilling in its core plays as well as in the Dorado and Utica in 2024, with expected capital spending of $6-$6.4 billion for the year.
Despite strong gains of 160% for EOG stock from early 2021 to now, the stock has had inconsistent performance, with returns of 78% in 2021, 46% in 2022, and -7% in 2023. This underperformance compared to the S&P 500 highlights the challenges faced by individual stocks in consistently beating the market. The Trefis High Quality Portfolio, consisting of 30 stocks, has outperformed the S&P 500 each year over the past three years, suggesting a more stable investment option. With the current uncertain macroeconomic environment, EOG could face challenges in outperforming the market in the coming months.
Trefis estimates EOG’s Q1 2024 revenues to be around $6 billion, slightly above consensus estimates, with total production increasing by 13% year-over-year to 1.03 million Boe/day in Q4. However, the average realized crude oil and condensate price for the quarter declined to $80.60/bbl from $85.67/bbl a year earlier. EOG produces oil and gas from five U.S. shale basins, including Bakken, Powder River, Wyoming DJ, Delaware, and Eagle Ford. Earnings per share for Q1 are expected to be $2.69, marginally missing consensus estimates.
The stock price estimate for EOG aligns closely with the current market price, at around $133 per share based on an EPS estimate of $12.06 and a P/E multiple of 11.0x in fiscal 2024. The company’s valuation is in line with its peers, as shown in the EOG Resources Peers analysis. Overall, the upcoming Q1 results for EOG Resources will be closely watched to see how the company performs in the face of challenging market conditions and whether it can maintain its financial strength and growth trajectory.
