EOG Resources (EOG) Valuation in Focus After Scotiabank Downgrade and Expanding Global Operations

Thinking about what to do with EOG Resources (EOG) after this week’s Scotiabank downgrade? The bank shifted its rating from Outperform to Sector Perform, pointing directly at EOG’s current valuation when stacked against other large exploration and production peers. While this isn’t a red flag for EOG’s operations or its expansion into global shale plays, it does put fresh focus on how investors should interpret both the risk and potential upside at these share price levels.

The news comes after EOG has continued to post steady results and push further abroad, recently making moves in the UAE and Bahrain as part of new joint shale projects. Yet the past year hasn’t exactly rewarded long-term holders, with EOG shares slipping just over 1% in the last twelve months and trending about 6% lower in 2025. Even three-year returns stand at a respectable 18%, well behind the 329% five-year tally and suggesting momentum has cooled lately as the sector faces mixed signals and more cautious investor sentiment.

With the market responding to both valuation concerns and EOG’s global expansion story, the big question is clear: is there a real bargain here, or is everything already priced in?

Most Popular Narrative: 15.9% Undervalued

The dominant valuation narrative suggests EOG Resources is currently undervalued, with a fair value well above its current share price based on projected earnings and operational catalysts.

Ongoing advancements in proprietary drilling technology, high-frequency sensors, and generative AI are driving greater operational efficiencies, stronger well performance, and meaningful reductions in drilling and completion costs across EOG's portfolio. These improvements expand net margins and support sustainable earnings growth.

What if technology could completely reshape a legacy energy giant's profit profile? This most-followed narrative hints at aggressive expansion, efficiency, and bold targets that go well beyond the usual analyst chatter. Curious which surprising figures underpin this undervaluation claim? The details behind this projected upside just might surprise you.

Result: Fair Value of $139.45 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, faster than expected renewable adoption or failure to realize promised operational efficiencies could challenge the upbeat outlook for EOG’s future growth and margins.

Find out about the key risks to this EOG Resources narrative.

Another View: What Does the SWS DCF Model Say?

While analyst targets indicate value ahead, our DCF model provides a very different perspective. It suggests there may be even more upside than most investors anticipate. Could this closer examination of cash flows reveal an overlooked opportunity?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out EOG Resources for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own EOG Resources Narrative

Not seeing your perspective reflected in these valuations? It’s easy to dive into the numbers yourself and shape your own view in just minutes. Do it your way.

A great starting point for your EOG Resources research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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