Long-established in the Oil & Gas industry, EQT Corp (EQT, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 0.03%, juxtaposed with a three-month change of -7.79%. 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: 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 $16.30 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. The company is known for its combo-development projects, which aim to develop multiwell pads efficiently and sustainably. Its primary customers are marketers, utilities, and industrial operators in the Appalachian Basin. EQT Corp operates one reportable segment, with revenues derived from natural gas, natural gas liquids, and crude oil, all generated within 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 74.74% of 768 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 is just 1.58, which is below the distress zone of 1.81, suggesting potential financial distress. Moreover, the company's low cash-to-debt ratio at 0.01 indicates a struggle in handling existing debt levels.
Profitability Breakdown
EQT Corp's Profitability rank of 5/10 can also raise warning signals. This metric evaluates a company's ability to generate income relative to revenue, assets, equity, and other financial metrics. A lower rank suggests that EQT Corp may not be as efficient in converting its business activities into profits, which is a crucial aspect for long-term value creation.
Growth Prospects
The company's low Growth rank of 4/10 indicates a lack of significant growth, which is a concern for investors looking for expanding operations and increasing market share. Furthermore, EQT Corp's predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency. This low predictability can deter investors who prefer stable and predictable returns over time.
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 may want to look for companies with stronger GF Scores to enhance their portfolios. 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.
