EOG Fell 8.4% In A Month. What To Do Now?
EOG Resources (EOG) stock is down 8.4% in 21 trading days. The stock looks attractive, but if you are going to buy it, you got to be in it for the long run. Do not expect quick bucks. Consider the following data:
- Size: A $60 Bil company with $23 Bil in revenue currently trading at $110.40.
- Fundamentals: Last 12 month revenue growth of -5.4% and operating margin of 34.2%.
- Liquidity: Has Debt to Equity ratio of 0.08 and Cash to Assets ratio of 0.11
- Valuation: Currently trading at P/E multiple of 10.5 and P/EBIT multiple of 7.9
- Has one instance since 2010 where it dipped >30% in < 30 days and subsequently returned 11.2% within a year. See EOG Dip Buy Analysis.
While we like to buy dips if the fundamentals check out – for EOG, see Buy or Sell EOG Stock – we are wary of falling knives. Specifically, it is worth trying to answer if things get really bad, and EOG drops another 20-30% to $77 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience.
Below is a deep dive into EOG Resources (EOG) downturn resilience – specifically, its performance vs the market during past crises? Turns out, the stock has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
Below are the details, but before that, as a quick background: EOG provides exploration, development, production, and marketing of crude oil and natural gas primarily in New Mexico, Texas, and Trinidad and Tobago.
2022 Inflation Shock
- EOG stock fell 34.8% from a high of $145.93 on 7 June 2022 to $95.12 on 14 July 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 7 November 2022
- Since then, the stock increased to a high of $148.26 on 8 November 2022 , and currently trades at $110.40
| EOG | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -34.8% | -25.4% |
| Time to Full Recovery | 116 days | 464 days |
2020 Covid Pandemic
- EOG stock fell 66.7% from a high of $89.29 on 7 January 2020 to $29.76 on 18 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 8 October 2021
| EOG | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -66.7% | -33.9% |
| Time to Full Recovery | 569 days | 148 days |
2018 Correction
- EOG stock fell 51.3% from a high of $132.35 on 9 October 2018 to $64.44 on 18 October 2019 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 25 May 2022
| EOG | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -51.3% | -19.8% |
| Time to Full Recovery | 950 days | 120 days |
2008 Global Financial Crisis
- EOG stock fell 68.2% from a high of $71.70 on 20 May 2008 to $22.80 on 2 March 2009 vs. a peak-to-trough decline of 56.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 11 July 2013
| EOG | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -68.2% | -56.8% |
| Time to Full Recovery | 1592 days | 1480 days |
Worried that EOG could fall much more? You could take a look at the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.