Analysts on Wall Street Express Positive Outlook Towards EOG Resources' Shares?
In the ever-evolving world of energy, EOG Resources (EOG) has been experiencing a challenging period. Despite delivering higher-than-expected volumes and solid earnings surprises, the company's stock has underperformed both the S&P 500 and the Energy Select Sector SPDR Fund (XLE) over the past year.
The primary reasons behind this underperformance can be attributed to a decline in earnings compared to last year, cautious capital expenditure reductions, and a challenging oil and gas pricing environment.
In Q2 2025, EOG beat EPS estimates by 4%, with $2.32 per share. However, this still represents a 26.6% decline year-over-year from $3.16 per share in Q2 2024, reflecting lower net income and pressures on profitability.
The company reported $973 million in free cash flow in Q2 2025, down 29% from the prior year, indicating reduced cash generation to reinvest or return to shareholders despite operational efficiencies. To protect cash flow, management trimmed 2025 capital expenditures by $200 million, signaling a more cautious investment approach in a difficult pricing environment, which may constrain growth expectations.
The sector broadly faces pricing pressures, which impact revenue and margins, leading to tempered investor enthusiasm despite production volume gains. Investors may also be favouring other stocks within the S&P 500 or energy ETF like XLE, which might have higher exposure to capitalizing on current market trends.
As of now, EOG Resources has a consensus "Moderate Buy" rating overall. The stock has a market cap of approximately $63.6 billion and operates across the United States, the Republic of Trinidad and Tobago, and internationally.
For the full fiscal 2025, ending in December, analysts expect EOG to deliver an adjusted EPS of $10.01, down 13.9% year-over-year. Over the past 52 weeks, EOG stock has dropped 4.8%, while the Energy Select Sector SPDR Fund (XLE) has declined 3.4%.
Despite the challenges, EOG Resources has a solid earnings surprise history, having surpassed the Street's bottom-line estimates in each of the past four quarters. The mean price target for EOG is $139.61, which represents a 19.3% premium to current price levels. Susquehanna analyst Biju Perincheril's price target for EOG suggests a 45.3% upside potential from current price levels.
It's important to note that all information and data in this article is solely for informational purposes. Aditya Sarawgi did not have positions in any of the securities mentioned at the date of publication. The article's website Disclosure Policy can be viewed here.
[1]: Source: EOG Resources Q2 2025 Earnings Release [3]: Source: EOG Resources Q1 2025 Earnings Release [5]: Source: FactSet Earnings Insight for EOG Resources Q2 2025
The underperformance of EOG Resources' stock might be due to a decline in earnings, a challenging oil and gas pricing environment, and conservative capital expenditure reductions. Despite consistent earnings surprises, the company's cautious investment approach and reduced free cash flow could be deterring investors, especially those preferring other stocks with higher exposure to market trends.
Despite the current challenges, EOG Resources holds a solid earning surprise history and maintains a consensus "Moderate Buy" rating overall, with a mean price target suggesting a significant upside potential.
