Long-established in the Oil & Gas industry, EQT Corp (EQT, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 0.53%, juxtaposed with a three-month change of -10.29%. 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: 5/10
- GF Value rank: 1/10
- Momentum rank: 8/10
Based on the above method, GuruFocus assigned EQT Corp the GF Score of 66 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. 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.
With a market cap of $15.43 billion and sales of $5.07 billion, EQT Corp operates with an operating margin of 12.99%, reflecting its ability to manage expenses relative to its net sales.
Financial Strength Breakdown
EQT Corp's financial strength indicators present some concerning insights about the company's balance sheet health. An interest coverage ratio of 3 positions it worse than 73.97% of 776 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 1.53, 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 0.01 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 is challenged by various factors, which may include competitive pressures, operational inefficiencies, or fluctuating market conditions. As profitability is a key determinant of a company's financial health and its ability to deliver returns to shareholders, this low ranking is a concern for potential investors.
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 weigh these factors carefully against the backdrop of industry trends, regulatory factors, and technological advancements that could influence the company's future prospects. Is EQT Corp poised to navigate these challenges, or will these headwinds limit its ability to outperform? Value investors may want to look for opportunities with stronger GF Scores, which can be found using the GF Score Screen available to GuruFocus Premium members.
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.
