Looking at EOG Resources, Inc.'s (NYSE:EOG) earnings update in June 2019, analyst forecasts seem bearish, as a 15% fall in profits is expected in the upcoming year relative to the past 5-year average growth rate of 27%. Presently, with latest-twelve-month earnings at US$3.4b, we should see this fall to US$2.9b by 2020. Below is a brief commentary on the longer term outlook the market has for EOG Resources. For those interested in more of an analysis of the company, you can research its fundamentals here.
Exciting times ahead?
The longer term expectations from the 21 analysts of EOG is tilted towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
This results in an annual growth rate of 15% based on the most recent earnings level of US$3.4b to the final forecast of US$4.1b by 2022. EPS reaches $8.1 in the final year of forecast compared to the current $5.93 EPS today. However, the near term margins may change heading into 2022, from the current levels of 20% to 19%.
Future outlook is only one aspect when you're building an investment case for a stock. For EOG Resources, there are three key aspects you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is EOG Resources worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether EOG Resources is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of EOG Resources? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.