Long-established in the Oil & Gas industry, EQT Corp (EQT, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 3.96%, juxtaposed with a three-month change of -1.36%. 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: 8/10
- GF Value rank: 1/10
- Momentum rank: 5/10
Based on the above method, GuruFocus assigned EQT Corp the GF Score of 69 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 Marcellus and Utica shale plays in the Appalachian Basin. At year-end 2023, EQT's proven reserves totaled 27.6 trillion cubic feet equivalent, with net production of 5.79 billion cubic feet equivalent per day. Natural gas accounted for 94% of production. With a market cap of $21.51 billion and sales of $4.58 billion, the company's operating margin stands at -4.71%, reflecting some operational challenges.
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 757 companies in the Oil & Gas industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. The esteemed investor Benjamin Graham typically favored companies with an interest coverage ratio of at least five.
The company's Altman Z-Score is just 1.74, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years. Additionally, the company's low cash-to-debt ratio at 0.01 indicates a struggle in handling existing debt levels.
Profitability Breakdown
EQT Corp's low Profitability rank can also raise warning signals. This metric reflects the company's ability to generate earnings as compared to its expenses and other relevant costs. For investors, a low profitability rank might hint at operational inefficiencies or challenges in maintaining profitability in a competitive or shifting market landscape.
Next Steps
Considering the company's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. Investors should weigh these factors heavily when considering the future prospects of EQT Corp. For those looking to explore more robust investment opportunities, GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen.
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.
