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What Should We Expect From EOG Resources, Inc.'s (NYSE:EOG) Earnings Over The Next Few Years?

Simply Wall St

EOG Resources, Inc.'s (NYSE:EOG) most recent earnings announcement in December 2018 suggested that the business benefited from a robust tailwind, eventuating to a double-digit earnings growth of 32%. Below is my commentary, albeit very simple and high-level, on how market analysts view EOG Resources's earnings growth outlook over the next few years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.

View our latest analysis for EOG Resources

Market analysts' prospects for the upcoming year seems pessimistic, with earnings decreasing by a double-digit -20%. However, the next few years show a contrast, with earnings growth becoming positive in 2021, with the bottom line increasing to US$4.2b in 2022.

NYSE:EOG Past and Future Earnings, April 14th 2019

While it’s helpful to understand the growth year by year relative to today’s figure, it may be more insightful estimating the rate at which the earnings are growing every year, on average. The benefit of this technique is that we can get a bigger picture of the direction of EOG Resources's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I've inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 11%. This means, we can assume EOG Resources will grow its earnings by 11% every year for the next few years.

Next Steps:

For EOG Resources, I've put together three relevant aspects you should further examine:

  1. 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.
  2. Valuation: What is EOG 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 is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of EOG? 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 editorial-team@simplywallst.com. 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.