On May 31, Zacks Investment Research upgraded independent oil
and gas exploration and production (E&P) company,
EOG Resources Inc.
) to a Zacks Rank #2 (Buy).
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EOG RES INC (EOG): Free Stock Analysis Report
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Why the Upgrade?
Operating environment and growth prospects seem bright for EOG,
as reflected by the rising earnings estimates for this leading
Houston, Texas-based company. Over the last 30 days, the Zacks
Consensus Estimate for the second quarter of 2013 has increased
19.5% to $1.59 per share, while that for 2013 rose 11.9% to $6.68
The momentum has been strong since EOG released its first quarter
earnings results on May 6. Adjusted earnings per share came in at
$1.80 per share, exceeding the Zacks Consensus Estimate of $1.13
by 59.3% and improving 53.8% from $1.17 a year ago. The
outperformance was aided by a striking improvement in high margin
crude oil production.
With respect to the earnings trend, EOG delivered positive
earnings surprises in all the last four quarters with an average
beat of 39.78%. The long-term expected earnings and sales growth
projections of 11.81% and 20.65%, respectively, are also fairly
Going forward, EOG's increasing interest in oil is appreciable in
a favorable price environment. It will be augmented by its deep
focus on major oil and liquids rich plays, while holding core
natural gas and Combo acreage in the Barnett, Leonard and
Wolfcamp plays for the long term.
Other Stocks to Consider
There are certain other E&P firms in the energy sector that
are worth considering. Those include
EPL Oil & Gas Inc.
) as well as
Abraxas Petroleum Corporation
) with Zacks Rank #1 (Strong Buy) and
Sandridge Mississippian Trust II
) with Zacks Rank #2.