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 1.09%, juxtaposed with a three-month change of -6.37%. 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: 4/10
- GF Value rank: 1/10
- Momentum rank: 7/10
Based on the above method, GuruFocus assigned EQT Corp the GF Score of 63 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 $16.25 billion and sales of $5.07 billion. With an operating margin of 12.99%, the company focuses on the Marcellus and Utica shales in the Appalachian Basin, executing combo-development projects to develop multiwell pads. These efforts aim to meet supply needs while maximizing operational efficiency, technology, and sustainability. EQT Corp's main customers include marketers, utilities, and industrial operators in the Appalachian Basin. The company's revenue primarily comes from natural gas, with most generated in the U.S., particularly 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. The company's interest coverage ratio of 3 positions it worse than 74.77% of 769 companies in the Oil & Gas industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. The company's Altman Z-Score of just 1.59, which is below the distress zone of 1.81, 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. The company's profitability metrics, which are essential indicators of its ability to generate income relative to revenue, assets, operating costs, and equity, are not as robust as investors might prefer. This could be a red flag for those looking for companies with strong and consistent profit margins.
Growth Prospects
A lack of significant growth is another area where EQT Corp seems to falter, as evidenced by the company's low Growth rank. In a rapidly evolving energy sector, where innovation and adaptation are key to sustainability and profitability, EQT Corp's growth metrics suggest it may not be keeping pace with industry changes or capitalizing on potential market opportunities. Furthermore, EQT Corp's predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
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.
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 factors.
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.
