EOG RESOURCES INC (NYSE:EOG) – A GARP Candidate in the Energy Sector

EOG RESOURCES INC (NYSE:EOG) stands out as a potential candidate for long-term investors seeking growth at a reasonable price (GARP). The company, an independent oil and gas producer, meets several key criteria from Peter Lynch’s investment strategy, combining solid profitability, financial health, and an attractive valuation.

Why EOG Fits the GARP Approach

• Earnings Growth: EOG has delivered a 5-year average EPS growth of 18.45%, aligning with Lynch’s preference for sustainable but not excessive growth (15-30% range).
• Reasonable Valuation: With a PEG ratio of 0.56 (well below Lynch’s threshold of 1), the stock appears undervalued relative to its growth prospects.
• Strong Profitability: The company’s return on equity (ROE) of 20.59% exceeds Lynch’s 15% benchmark, reflecting efficient use of shareholder capital.
• Healthy Balance Sheet: EOG maintains a conservative debt profile, with a debt-to-equity ratio of 0.12, far below the screen’s 0.6 limit. Liquidity is also sound, with a current ratio of 1.87.

Fundamental Highlights

EOG’s financial strength is further supported by:

• High operating margins (34.82%) and profit margins (26.13%), outperforming most peers in the oil and gas sector.
• A reliable dividend yield of 3.37%, backed by a sustainable payout ratio and a 10-year payment history.
• Positive free cash flow and a low debt-to-FCF ratio (0.86), indicating strong solvency.

While recent revenue and earnings growth has slowed, the company’s disciplined capital allocation and focus on high-return projects position it well for long-term investors.

For a deeper dive, review the full fundamental analysis of EOG.

Our Peter Lynch Strategy screener lists more stocks matching these criteria and is updated regularly.

Disclaimer

This is not investing advice. The observations here are based on data available at the time of writing. Always conduct your own research before making investment decisions.