Yahoo Finance Why You Should Buy EOG Resources (EOG) After Strong Q1 Earnings
EOG Resources Inc EOG reported robust first-quarter 2024 results, with both earnings and revenues beating the Zacks Consensus Estimate. The company reported adjusted earnings per share of $2.82, which increased almost 5% year over year, while revenues came in at $6.1 billion, up 1.3% year over year.
Good Entry Point for Investors
Although the quarterly results were strong, the stock price fell 1.4%, a movement unrelated to the company's fundamentals, thereby making the stock cheap. The current affordability of the stock is evident from its trailing 12-month enterprise value-to-EBITDA (EV/EBITDA) ratio, which stands at 5.82, notably lower than the Zacks US Oil & Gas Exploration & Production industry average of 8.29.
The company's robust business model is evidenced by its diverse portfolio of upstream assets spread across multiple basins, representing a resource potential of approximately 10 billion barrels of oil equivalent. Leveraging its extensive array of untapped, high-quality drilling sites, the company has fortified its production prospects, thus enhancing its cash flow projections.
Regarding costs, the prominent exploration and production player is observing significantly lower well expenses than the industry average, thanks to its advanced drilling methods. Moreover, the company noted that its breakeven oil price is considerably lower than the industry average. Developments in these fronts are helping EOG to continue generating significant returns for investors.
In times of uncertainty and challenging market conditions, unlike numerous other energy companies, EOG can rely on its robust balance sheet to navigate through volatile and uncertain market environments. Remarkably, the company's debt-to-capitalization ratio is just 11.7%, considerably below the industry average of 29.3%.
Thus, a high-quality multi-basin resource base, cost-efficient business model and strong balance sheet are backing EOG’s sustainable dividend payments. With a track record of stable and increasing dividends spanning 26 years, EOG demonstrates its commitment to delivering shareholder returns across different price cycles.
Closing Thoughts
EOG prioritizes positioning itself as one of the top oil and gas producers in terms of high returns, low costs and minimal emissions, playing a pivotal role in shaping the future of energy. Notably, it aims for net zero scope 1 and scope 2 GHG emissions by 2040.
Hence, investors should consider purchasing EOG, which currently carries a Zacks Rank #2 (Buy), without delay. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Energy Giants
Exxon Mobil Corporation XOM and Chevron Corporation CVX are the two integrated energy giants that have already reported first-quarter earnings. While ExxonMobil missed the Zacks Consensus Estimate of earnings for the first quarter, Chevron beat the consensus estimate for the same.
One of the largest integrated energy firm,Shell plc SHEL, has also reported earnings. The company said that it has once again achieved a quarter marked by robust financial and operational performance. Apart from reducing emissions, Shell is also showcasing its strong commitment to generating handsome value for shareholders.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Chevron Corporation (CVX) : Free Stock Analysis Report
Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
EOG Resources, Inc. (EOG) : Free Stock Analysis Report
Shell PLC Unsponsored ADR (SHEL) : Free Stock Analysis Report
