Long-established in the Oil & Gas industry, EQT Corp (EQT, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a daily loss of 0.37%, juxtaposed with a three-month change of 16.21%. 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: 7/10
- GF Value rank: 1/10
- Momentum rank: 5/10
Based on the above method, GuruFocus assigned EQT Corp the GF Score of 67 out of 100, which signals poor future outperformance potential.
Understanding EQT Corp's Business
EQT Corp is an independent natural gas production company with operations focused in the cores of the Marcellus and Utica shales in the Appalachian Basin, located in the Eastern United States. With a market cap of $18.06 billion and sales of $4.54 billion, the firm focuses on executing combo-development projects for developing multiwell pads to meet supply needs, with a focus on maximizing operational efficiency, technology, and sustainability. Its main customers include marketers, utilities, and industrial operators in the Appalachian Basin. The company has one reportable segment and its revenue stems from three types of gas reserves: natural gas, natural gas liquids, and crude oil. All of the firm's operating revenue is generated in the U.S., with most revenue flowing from the Marcellus Shale field and through the sale of natural gas.
Financial Strength Breakdown
EQT Corp's financial strength indicators present some concerning insights about the company's balance sheet health. The company has an interest coverage ratio of 0, which positions it worse than 0% of 759 companies in the Oil & Gas industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. It's worth noting that the esteemed investor Benjamin Graham typically favored companies with an interest coverage ratio of at least five. Furthermore, the company's Altman Z-Score is just 1.49, which is below the distress zone of 1.81, suggesting that the company may face financial distress over the next few years. Additionally, the company's low cash-to-debt ratio at 0.12 indicates a struggle in handling existing debt levels.
Profitability Breakdown
EQT Corp's low Profitability rank can also raise warning signals. The company's operating margin stands at -1.52%, which may reflect inefficiencies in its operations or competitive pressures in the industry. This low profitability, combined with the financial strength concerns, paints a picture of a company that may struggle to generate the returns investors have come to expect from it in the past.
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 find companies with strong GF Scores using the following screener link: GF Score Screen.
As EQT Corp navigates through these challenging times, will it be able to leverage its historical reputation to overcome the hurdles ahead, or will the financial and profitability concerns weigh down its potential? For value investors, the answer to this question could be the key to unlocking future investment strategies.
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.
