Is EOG Resources (NYSE: EOG) one of the best value stocks in today’s market? This blog dives into a structured Discounted Cash Flow (DCF) valuation across Bear, Base, and Bull scenarios, ideal for anyone playing stocks with a focus on value investing. Built on unlevered free cash flow projections and realistic growth assumptions, the analysis reveals why EOG could be a top contender among the hottest stocks. Plus, we assess the company’s strong dividend coverage, making it a solid pick for value-focused investors.
All figures are in millions of USD unless otherwise stated.
I. DCF Valuation — Bear Case
- EBITDA Growth Rate: 2%
- Terminal Growth Rate: 1.5%
- Discount Rate: 9%
- Sum of PV of UFCF (2024–2029): $15,851
- Terminal Value (TV): $53,449
- PV of Terminal Value: $34,738
- Enterprise Value (EV): $50,589
- Net Debt: -$1,537
- Equity Value: $52,126
- Shares Outstanding: 554M
- Intrinsic Value per Share: $94.14
II. DCF Valuation — Base Case
- EBITDA Growth Rate: 4%
- Terminal Growth Rate: 2.5%
- Discount Rate: 7.5%
- Sum of PV of UFCF (2024–2029): $18,812
- Terminal Value (TV): $102,536
- PV of Terminal Value: $71,423
- Enterprise Value (EV): $90,235
- Net Debt: -$1,537
- Equity Value: $91,772
- Shares Outstanding: 554M
- Intrinsic Value per Share: $165.74
III. DCF Valuation — Bull Case
- EBITDA Growth Rate: 6%
- Terminal Growth Rate: 3.5%
- Discount Rate: 6.5%
- Sum of PV of UFCF (2024–2029): $21,871
- Terminal Value (TV): $211,770
- PV of Terminal Value: $154,567
- Enterprise Value (EV): $176,438
- Net Debt: -$1,537
- Equity Value: $177,975
- Shares Outstanding: 554M
- Intrinsic Value per Share: $321.43
IV. Valuation Summary and Upside Potential
- Current Price: $125
- Bear Case Intrinsic Value: $94.14 → -25% downside
- Base Case Intrinsic Value: $165.74 → 32% upside
- Bull Case Intrinsic Value: $321.43 → 157% upside
V. Dividend Sustainability Analysis
- Dividend per Share: $3.71
- Shares Outstanding: 554M
- Total Dividends Paid: 554 × 3.71 = $2,056M
- Free Cash Flow (Used for Analysis): $5,509M
- Dividend Payout Ratio (FCF Basis):
- $2,056 / $5,509 = 0.373 or ~37.3%
- Assessment:
- Payout ratio is well within sustainable levels
- Over 60% of FCF retained, supporting reinvestment or future increases
- Conclusion: Dividend appears sustainable, with room for continued payout under current free cash flow performance
VI. Summary View
This data-driven, scenario-based analysis demonstrates that EOG trades at a substantial discount to its modeled fair value in the base and bull scenarios. The bear case suggests slight overvaluation, implying limited downside risk.
- DCF Takeaway: The intrinsic value per share spans from $94.14 (Bear) to $321.43 (Bull)
- Dividend Insight: The 37% payout ratio reinforces dividend safety and cash flow efficiency
- Quantitative Summary: At $125, EOG is potentially undervalued, especially if base or optimistic scenarios materialize
Valuation Range: $94.14 – $321.43
The Hartford (HIG): DCF Valuation Reveals Undervalued Intrinsic Value Across Scenarios (2025)
