Long-established in the Oil & Gas industry, EQT Corp (EQT, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 0.99%, juxtaposed with a three-month change of 0.63%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of EQT Corp.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 5/10
- Profitability rank: 5/10
- Growth rank: 3/10
- GF Value rank: 1/10
- Momentum rank: 5/10
Based on the above method, GuruFocus assigned EQT Corp the GF Score of 59 out of 100, which signals poor future outperformance potential.
Understanding EQT Corp's Business
EQT Corp is an independent natural gas production company with a market cap of $16.69 billion and sales of $5.07 billion. Operating with a margin of 12.99%, EQT Corp focuses on the Marcellus and Utica shales in the Appalachian Basin, located in the Eastern United States. The company is dedicated to combo-development projects, aiming to develop multiwell pads to meet supply needs while maximizing operational efficiency, technology, and sustainability. Its main customers include marketers, utilities, and industrial operators in the Appalachian Basin. With one reportable segment, EQT Corp's revenue comes from natural gas, natural gas liquids, and crude oil, all generated in the U.S., predominantly from the Marcellus Shale field.
Financial Strength Breakdown
EQT Corp's financial strength indicators present some concerning insights about the company's balance sheet health. With an interest coverage ratio of 3, EQT Corp is positioned worse than 73.82% of 760 companies in the Oil & Gas industry. This ratio, which Benjamin Graham preferred to be at least five, highlights potential challenges in handling interest expenses on outstanding debt. Furthermore, the company's Altman Z-Score of 1.59 is below the distress zone threshold of 1.81, indicating possible financial distress in the future. The low cash-to-debt ratio of 0.01 also suggests difficulties in managing existing debt levels.
Profitability Breakdown
EQT Corp's Profitability rank of 5/10 raises concerns about the company's ability to generate earnings relative to its peers. This middling rank reflects a level of profitability that may not support strong future performance, especially in a competitive and volatile industry like Oil & Gas.
Growth Prospects
The company's low Growth rank of 3/10 is another red flag, indicating a lack of significant growth. This is further compounded by EQT Corp's predictability rank of one star out of five, which adds to investor uncertainty regarding the consistency of revenue and earnings.
Next Steps
Considering EQT Corp's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. Investors should be cautious and consider these factors when evaluating the company's future prospects. For those seeking more robust investment opportunities, GuruFocus Premium members can explore companies with strong GF Scores using the GF Score Screen.
Will EQT Corp navigate through these challenges to emerge stronger, or will these headwinds limit its ability to outperform? Only time will tell, but informed investors will keep a close eye on these critical indicators.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
