Is EOG Stock A Bargain At $120?

Core Viewpoint - EOG Resources' stock is currently trading at approximately $120, which is below historical averages despite strong fundamentals, making it an attractive investment opportunity [2][11] Financial Performance - EOG Resources has a multi-basin, low-cost portfolio with over 10 billion barrels of oil equivalent in accessible resources [3] - The company returned approximately $806 million to shareholders through share buybacks in Q1, reducing its share count by about 7% over the last three years while maintaining a growing dividend [3] - EOG's revenues have seen a slight increase, growing at an average rate of 3.0% over the last three years, but have decreased by 0.2% in the last 12 months [5] - Quarterly revenues decreased by 7% to $5.7 billion from $5.9 billion year-over-year [6] Profitability Metrics - EOG Resources' operating income for the past four quarters was $8.3 billion, with an operating margin of 35.6% [6] - The company's operating cash flow during this period was $12 billion, indicating a high OCF margin of 49.3% [6] - EOG's net income for the last four quarters stood at $6.1 billion, resulting in a net income margin of 26.0% [6] Valuation Comparison - EOG Resources has a price-to-sales (P/S) ratio of 2.9, compared to 3.1 for the S&P 500, and a price-to-earnings (P/E) ratio of 11.2 against the benchmark's 26.9 [5] - The price-to-free cash flow (P/FCF) ratio is 12.4, in contrast to 20.9 for the S&P 500 [5] Financial Stability - EOG Resources' debt stood at $4.7 billion, with a market capitalization of $69 billion, resulting in a low debt-to-equity ratio of 6.8% [8] - Cash and cash equivalents amount to $6.6 billion of the total assets of $47 billion, leading to a strong cash-to-assets ratio of 14.0% [8] Resilience During Downturns - EOG stock has historically performed worse than the S&P 500 during downturns, with significant declines observed during the inflation shock in 2022 and the COVID pandemic in 2020 [9][10] - The stock has shown a tendency to recover fully from past crises, indicating potential for future recovery [10] Overall Assessment - EOG Resources is positioned as an attractive investment due to its low valuation and strong financial metrics, despite some concerns regarding its performance during market downturns [11][13]