EOG Resources, Inc.EOGNYSE

Overview Intelligence Charts News Fundamentals

DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $355.00 per share(market-calibrated)

+177.3%

Upside to Fair Value

Current

$128.01

Pure Model

$374.73

Fair Value

$355.00

Bull Case

$449.76

Bear Case

$325.94

Market Reality Check

Model Terminal Growth

2.00%

Market-Implied Growth

0.50%

Calibrated Growth

1.48%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $374.73.

What's Driving This Ratingfor EOG

↓

CapEx normalizing toward maintenance

Historical CapEx is 24.39% of revenue (heavy investment phase). Model fades this to 5.50% by Year 10, freeing up ~$5.5B in annual FCF. This is the biggest driver of long-term cash flow improvement.

✓

Premium margins already priced in

EBIT margin of 34.50% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

⚠

Analyst growth decelerates sharply

Revenue growth drops from 4.05% in Year 1 to 0.19% by Year 5 (per analyst consensus). That's below the 2.00% terminal rate, so growth re-accelerates in Years 6-10 — a generous assumption. This growth deceleration is a key reason the model may undervalue the stock if growth re-accelerates.

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 150bps below the model's 2.00%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 75.54% indicates efficient cash generation. FCF reaches $11.7B by Year 10 (39.96% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.43

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)6.42%

Cost of Debt

Pre-tax Cost of Debt2.05%

Tax Rate21.44%

After-tax Cost of Debt1.61%

Equity Weight (E/V)89.14%

Debt Weight (D/V)10.86%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (89.14% × 6.42%) + (10.86% × 1.61%)

= 5.90%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$23.5B	$26.9B	$27.5B	$27.9B	$29.3B
EBIT	$8.1B	$9.3B	$9.5B	$9.6B	$10.1B
Tax	$1.7B	$2.0B	$2.0B	$2.1B	$2.2B
NOPAT	$6.4B	$7.3B	$7.5B	$7.6B	$7.9B
+ Depreciation	$4.3B	$5.0B	$5.1B	$5.1B	$5.4B
- Capex	$5.7B	$5.4B	$4.4B	$3.3B	$1.6B
- Δ NWC	$20M	$50M	$1M	$6M	$13M
Free Cash Flow	$4.9B	$6.8B	$8.1B	$9.4B	$11.7B
Discount Factor	0.944	0.842	0.751	0.669	0.564
Present Value	$4.7B	$5.7B	$6.1B	$6.3B	$6.6B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$11.7B

Terminal Growth Rate2.00%

WACC5.90%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$306.4B

PV of Terminal Value$172.7B

Exit Multiple Method

Year 10 EBITDA$15.5B

Exit Multiple (EV/EBITDA)14.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$217.1B

PV of Terminal Value$122.4B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$59.5B

PV of Terminal Value$172.7B

Enterprise Value$232.3B

(-) Net Debt$5.0B

Equity Value$227.2B

Shares Outstanding539M

Price per Share$421.42

Exit Multiple Method

PV of Projected FCFs$59.5B

PV of Terminal Value$122.4B

Enterprise Value$181.9B

(-) Net Debt$5.0B

Equity Value$176.9B

Shares Outstanding539M

Price per Share$328.04

Pure Model Fair Value

$374.73

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.00%	1.50%	2.00%	2.50%	3.00%
3.90%	$509.52	$564.86	$623.63	$598.06	$573.69
4.90%	$406.49	$433.13	$468.96	$519.73	$573.69
5.90%	$340.79	$355.83	$374.73	$399.19	$432.09
6.90%	$294.02	$303.37	$314.63	$328.46	$345.83
7.90%	$258.38	$264.59	$271.84	$280.45	$290.80

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$325.94

154.6% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 0.53

Base Case

$374.73

192.7% vs current

• Analyst consensus
• Terminal growth: 2.0%
• Beta: 0.43

Bull Case

$449.76

251.4% vs current

• +25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 0.36

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Energy Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth4.05%

Year 3 Revenue Growth9.28%

Year 5 Revenue Growth0.19%

Year 7 Revenue Growth0.91%

Year 10 Revenue Growth2.00%

Terminal Growth Rate2.00%

Margin & Efficiency

Current EBIT Margin34.50%

Terminal EBIT Margin35.14%

Tax Rate21.44%

Historical Capex / Rev24.39%

Terminal Capex / Rev5.50%

NWC / Revenue2.18%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 14x EV/EBITDA (Energy sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

Explore More

S&P 500 Screener

Filter and sort all 500 stocks

Market Movers

Today's biggest gainers and losers

Market Heatmap

Visual sector performance