Assessing EQT Stock After Its Impressive 56% Rally and 2025 Growth Forecasts

If you find yourself eyeing EQT stock and wondering if now is the time to make a move, you are definitely not alone. With energy markets evolving and natural gas remaining a hot topic among investors, EQT has sparked plenty of conversation lately. It is hard to ignore the company’s remarkable 56.5% gain over the past year, especially when you see that five-year total return standing tall at 244.3%. Even in the short term, EQT has held its ground, posting a nearly 10% return year to date despite some ups and downs throughout the past quarter.

These movements are not happening in a vacuum. Investors have been recalibrating their risk appetites amid changing market conditions and expectations for energy demand, and EQT has benefited from improved sentiment toward gas producers. Analysts are setting price targets that suggest even more upside, with the current share price trading at a 22% discount to their consensus target. On top of that, EQT’s value score comes in at 4 out of 6 by common valuation metrics, signaling undervaluation in most key areas.

But how do all these pieces fit together, and what do they mean for your investment decision? To answer that, let's walk through the specific valuation approaches analysts use and examine why these might not always tell the whole story, as you will see in the conclusion of our analysis.

EQT delivered 56.5% returns over the last year. See how this stacks up to the rest of the Oil and Gas industry.

Approach 1: EQT Cash Flows

The Discounted Cash Flow (DCF) model is a fundamental valuation approach that projects a company’s expected cash flows into the future and discounts them back to present value. This method allows investors to estimate what the business is truly worth today.

For EQT, the most recent twelve-month Free Cash Flow stands at $2.23 billion. Analysts expect this figure to steadily grow, reaching approximately $2.80 billion by 2030 and ranging from $2.80 billion to $2.80 billion per year through 2035, according to various forecasts. Over the next decade, projections indicate that EQT’s Free Cash Flow will remain robust, supported by gradual industry growth and operational performance.

Based on current discounted projections, the intrinsic fair value per share for EQT is estimated at $93.83. When compared to the current share price, this valuation suggests the stock trades at a 44.6% discount to its intrinsic value, which means EQT appears to be 44.6% undervalued by this model.

If you trust the DCF methodology and the assumptions behind it, EQT is currently trading well below what its future cash flows could justify.

Result: UNDERVALUED

Our DCF analysis suggests EQT is undervalued by 44.6%. Track this in your watchlist or portfolio, or discover more undervalued stocks based on DCF analysis.

Approach 2: EQT Price vs Earnings

The Price-to-Earnings (PE) ratio is widely used to value profitable companies because it directly relates a company’s stock price to its earnings power. A reasonable PE ratio can signal whether a stock is trading at an attractive multiple compared to its performance and future prospects.

What counts as a "normal" or fair PE ratio is influenced by a company’s growth expectations and perceived risks. Companies expected to deliver faster growth or operate with less risk typically command higher PE multiples. In contrast, slower-growing or riskier companies see lower valuations.

Currently, EQT trades at a PE ratio of 28.4x, compared to the oil and gas industry average of 13.2x and a peer group average of 38.2x. This places EQT’s valuation above the broader industry but below some of its direct competitors. To help put this in context, Simply Wall St’s proprietary Fair Ratio for EQT stands at 20.4x, reflecting company and industry fundamentals as well as growth and risk factors.

With EQT’s actual PE ratio sitting above its Fair Ratio, the stock appears somewhat expensive on an earnings basis, even though it looks more reasonably valued relative to peers. However, the difference between the Fair Ratio and the current PE is fairly pronounced, suggesting EQT is trading at a premium given its latest earnings profile.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your EQT Narrative

In investing, a Narrative is your story behind the numbers, tying together your personal view of EQT’s business, your expectations for its future revenue, earnings, and margins, and ultimately the fair value you assign to the stock.

Unlike traditional valuation ratios or static forecasts, Narratives link a company’s business outlook to financial forecasts and price targets. This lets you see how your perspective, or that of the broader investor community, translates into a buy or sell decision.

On Simply Wall St, Narratives are easy to create and compare. You have access to a whole community of active investors sharing their views, and your Narrative updates in real time whenever key news or earnings break.

This helps you react quickly and confidently. If your latest fair value is above the current price, you might buy. If it drops with new risks, you could decide to hold or sell, all based on the story you agree with.

For instance, on EQT, one Narrative sees long-term contract growth and robust free cash flow justifying a fair value of $74.0 per share. A more cautious outlook, emphasizing regulatory and decarbonization risks, leads another to estimate fair value as low as $42.0.

Do you think there's more to the story for EQT? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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