EOG Resources (NYSE:EOG) Ticks All The Boxes When It Comes To Earnings Growth

EOG Resources, Inc. +1.07%

EOG Resources, Inc.




Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like EOG Resources (NYSE:EOG). While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.

Check out our latest analysis for EOG Resources

EOG Resources' Improving Profits

EOG Resources has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. Thus, it makes sense to focus on more recent growth rates, instead. Over the last year, EOG Resources increased its EPS from US$12.80 to US$13.52. That's a modest gain of 5.6%.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. Unfortunately, EOG Resources' revenue dropped 18% last year, but the silver lining is that EBIT margins improved from 33% to 42%. While not disastrous, these figures could be better.

You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.

NYSE:EOG Earnings and Revenue History December 29th 2023

The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for EOG Resources' future EPS 100% free.

Are EOG Resources Insiders Aligned With All Shareholders?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

Insider selling of EOG Resources shares was insignificant compared to the one buyer, over the last twelve months. Specifically the Independent Director, Michael Kerr, spent US$2.6m, paying about US$130 per share. It's hard to ignore news like that.

The good news, alongside the insider buying, for EOG Resources bulls is that insiders (collectively) have a meaningful investment in the stock. We note that their impressive stake in the company is worth US$253m. This comes in at 0.3% of shares in the company, which is a fair amount of a business of this size. So despite their percentage holding being low, company management still have plenty of reasons to deliver the best outcomes for investors.

Does EOG Resources Deserve A Spot On Your Watchlist?

As previously touched on, EOG Resources is a growing business, which is encouraging. On top of that, we've seen insiders buying shares even though they already own plenty. That should do plenty in prompting budding investors to undertake a bit more research - or even adding the company to their watchlists. Before you take the next step you should know about the 1 warning sign for EOG Resources that we have uncovered.

Keen growth investors love to see insider buying. Thankfully, EOG Resources isn't the only one. You can see a a curated list of companies which have exhibited consistent growth accompanied by recent insider buying.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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