EQT Corporation (NYSE:EQT) Is About To Turn The Corner

By
Simply Wall St
Published
January 07, 2022
NYSE:EQT
Source: Shutterstock

With the business potentially at an important milestone, we thought we'd take a closer look at EQT Corporation's (NYSE:EQT) future prospects. EQT Corporation operates as a natural gas production company in the United States. The US$8.2b market-cap company posted a loss in its most recent financial year of US$967m and a latest trailing-twelve-month loss of US$2.9b leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which EQT will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for EQT

According to the 15 industry analysts covering EQT, the consensus is that breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$757m in 2022. Therefore, the company is expected to breakeven roughly 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 56% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
NYSE:EQT Earnings Per Share Growth January 7th 2022

We're not going to go through company-specific developments for EQT given that this is a high-level summary, however, keep in mind that by and large an energy business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we would like to bring into light with EQT is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in EQT's case is 75%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on EQT, so if you are interested in understanding the company at a deeper level, take a look at EQT's company page on Simply Wall St. We've also put together a list of relevant aspects you should further research:

  1. Valuation: What is EQT worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether EQT is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on EQT’s board and the CEO’s background.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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