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EOG Resources, Inc. (NYSE:EOG) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects. EOG Resources has also found favour with investors, with the stock up a remarkable 13% to US$83.10 over the past week. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.
After this upgrade, EOG Resources' 20 analysts are now forecasting revenues of US$14b in 2021. This would be a substantial 62% improvement in sales compared to the last 12 months. Per-share earnings are expected to bounce 4,931% to US$5.42. Before this latest update, the analysts had been forecasting revenues of US$14b and earnings per share (EPS) of US$5.18 in 2021. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for both revenues and earnings.
Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$84.69, suggesting that the forecast performance does not have a long term impact on the company's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic EOG Resources analyst has a price target of US$108 per share, while the most pessimistic values it at US$46.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting EOG Resources' growth to accelerate, with the forecast 90% annualised growth to the end of 2021 ranking favourably alongside historical growth of 11% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 4.2% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that EOG Resources is expected to grow much faster than its industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at EOG Resources.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for EOG Resources going out to 2025, and you can see them free on our platform here..
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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