Today we're going to take a closer look at large-cap Energy company EOG Resources, whose shares are currently trading at $114.56. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!
A Very Low P/E Ratio but Trades Above Its Graham Number:
EOG Resources, Inc., together with its subsidiaries, explores for, develops, produces, and markets crude oil, and natural gas and natural gas liquids. The company belongs to the Energy sector, which has an average price to earnings (P/E) ratio of 7.54 and an average price to book (P/B) ratio of 1.68. In contrast, EOG Resources has a trailing 12 month P/E ratio of 7.3 and a P/B ratio of 2.63.
When we divide EOG Resources's P/E ratio by its expected EPS growth rate of the next five years, we obtain its PEG ratio of -9.92. Since it's negative, the company has negative growth expectations, and most investors will probably avoid the stock unless it has an exceptionally low P/E and P/B ratio.
Overview of the Company's Finances:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $16,942 | $9,873 | $19,669 | $29,492 |
| Gross Margins | 67.0% | 50.1% | 72.8% | 81.4% |
| Operating Margins | 23.1% | 4.6% | 38.7% | 48.3% |
| Net Margins | 16.14% | -6.12% | 23.71% | 26.31% |
| Net Income (MM) | $2,735 | -$605 | $4,664 | $7,759 |
| Net Interest Expense (MM) | -185 | -205 | -178 | -179 |
| Net Interest Expense (MM) | -$185 | -$205 | -$178 | -$179 |
| Depreciation & Amort. (MM) | -$3,750 | -$3,400 | -$3,651 | -$910 |
| Earnings Per Share | $4.71 | -$1.04 | $7.99 | $15.68 |
| EPS Growth | n/a | -122.08% | 868.27% | 96.25% |
| Diluted Shares (MM) | 581 | 579 | 584 | 585 |
| Free Cash Flow (MM) | $1,741 | $1,543 | $4,941 | $2,152 |
| Capital Expenditures (MM) | -$6,423 | -$3,465 | -$3,850 | -$1,014 |
| Net Current Assets (MM) | -$10,211 | -$9,641 | -$7,472 | -$6,117 |
| Current Ratio | 1.18 | 1.69 | 2.12 | 1.9 |
| Long Term Debt (MM) | $4,161 | $5,035 | $5,072 | $3,795 |
| Net Debt / EBITDA | 0.47 | 0.97 | 0.01 | -0.05 |
EOG Resources has exceptional EPS growth and low leverage. Additionally, the company's financial statements display growing revenues and decreasing reinvestment in the business and generally positive cash flows. However, the firm has slimmer gross margins than its peers. Finally, we note that EOG Resources has average net margins with a positive growth rate and a decent current ratio.
