EOG Resources Inc (EOG)

Conclusion

EOG Resources explores for, develops and produces crude oil, natural gas liquids and natural gas in the United States, Trinidad and Tobago and abroad. At a price of 148.43 USD on 9 November 2026, the market capitalisation is 76.96 billion USD.

The verdict is undervalued. Today's multiples sit below their own ten-year medians: the price-to-earnings ratio is 9.4 against a median of 13.1, and the price-to-free-cash-flow ratio is 10.4 against 19.3. The fair value band runs from 211.64 to 317.46 USD with a midpoint of 264.55 USD, a margin of safety of 78.2%. The DCF gives 340.21 USD per share, and the fair value from historical multiples is 188.89 USD. The reverse DCF implies revenue growth of -2.9% a year, while revenue grew at 18.1% a year over five years, though it fell 8.4% a year over three.

What holds the case up is the return on capital: ROIC of 23.6% against a WACC of 8.4%, and an operating margin of 41.3%. The balance sheet is also strong, with net debt at 0.16 times EBITDA and interest coverage of 42.9. What would break it is the recent decline in earnings, with EPS down 11.3% a year over three years, and the weak free cash flow per share trend of -14.9% a year over three years. Next year's EPS estimate, at -12.2% growth, adds to that concern.

Financial health

Financial strength is green, held up by all four assessed measures: a current ratio of 1.90, net debt to EBITDA of 0.16, and interest coverage of 42.9. Debt to equity is 0.25 and the quick ratio is 1.64. The Altman Z-score is 4.13, in the safe zone. The Altman model was designed for manufacturers, so it is only a rough guide for an oil producer. Insolvency risk is low, about 0.09% by the estimate of the Ohlson model over one to two years. The company is not a financial business, so these models apply.

Earnings quality

Earnings quality is yellow. Free cash flow conversion is 90.2% on a trailing basis and 80.9% over five years, and the accrual ratio is -0.10, which points to cash earnings. Stock-based compensation is 0.8% of revenue, leaving free cash flow after it at 7.15 billion USD. The share count fell at a compound 1.4% a year over five years, which reflects buybacks. The Piotroski score is 4 out of 9, and the Beneish M-score is not available. EOG beat earnings estimates in all 8 recent quarters, with an average surprise of 5.6%. Current-year estimates rose 12.3% over 90 days, with 19 upward revisions and 3 downward in the last 30 days. Next-year estimates also rose 12.1% over 90 days, but they still imply EPS growth of -12.2%.

Profitability

Profitability is green. The operating margin is 41.3% against a ten-year median of 27.1%, and the net margin is 27.7% against 22.5%. The gross margin is 68.6%, close to its median of 68.5%, and the operating margin has been stable at 0.88. ROIC is 23.6% against a WACC of 8.4%, which gives a ROIC minus WACC value of 15.3 points, a sign that the company creates value. Return on equity is 24.7%. The DuPont split for 2025 shows a net margin of 22.0%, asset turnover of 0.44 and an equity multiplier of 1.74. Most of the return comes from margins, not leverage.

Growth

Growth is red. Revenue compounded at -8.4% over three years, at 18.1% over five years and at 10.1% over ten years. EPS fell 11.3% a year over three years. Free cash flow per share fell 14.9% a year over three years but rose 19.1% a year over five years. Revenue grew in 5 of the 10 comparable years. Recent growth has been weak, and the five-year figures depend on the earlier period of expansion.

Valuation

Valuation is green, assessed on a single measure: the verdict, with a margin of safety of 78.2%. The price-to-earnings ratio is 9.4 against a ten-year median of 13.1, a premium of -28.1%. EV to EBITDA is 5.1 against 6.4, a premium of -20.9%. Price to free cash flow is 10.4 against 19.3, a premium of -46.1%. Price to sales is 2.6 against 3.2, a premium of -18.0%, and price to book is 2.3 against 2.7, a premium of -13.0%. The DCF gives 340.21 USD per share on a discount rate of 8.87%, and the terminal value makes up 58.9% of that figure. The fair value band is an order-of-magnitude estimate built on fixed assumptions, a 5% equity risk premium and capped growth, not a price target. The reverse DCF implies -2.9% growth. The dividend yield is 2.8%, with a payout of 29.5% of free cash flow.

Risks

The main risk is that the recent earnings decline continues. A three-year EPS decline of 11.3% a year and next year's implied growth of -12.2% suggest that current cheap multiples may reflect falling profits. Weak free cash flow per share, down 14.9% a year over three years, would undermine the premium that the DCF assumes. The high terminal share of 58.9% means the DCF depends heavily on long-term assumptions. The Beneish M-score is not available, so manipulation risk cannot be checked with this data. The analysis has no debt maturity schedule and no breakdown of revenue by segment, so it cannot judge refinancing risk or the mix of business lines.