EQT currently trades at $58.20 per share and has shown little upside over the past six months, posting a middling return of 3.2%. However, the stock is beating the S&P 500’s 2.1% decline during that period.
Is there still a buying opportunity in EQT, or does the price properly account for its business quality and fundamentals? Find out in our full research report, it’s free.
Why Is EQT a Good Business?
The largest natural gas producer in the United States by daily volume, EQT (NYSE: EQT) produces natural gas and natural gas liquids from wells drilled in the Appalachian Basin.
1. Skyrocketing Revenue Shows Strong Momentum
Cyclical sectors like Energy often flatter weaker operators during favorable price environments, but a longer-term lens separates those from businesses that can consistently perform across market cycles. Over the last five years, EQT grew its sales at an impressive 16.4% compounded annual growth rate. Its growth surpassed the average energy upstream and integrated energy company and shows its offerings resonate with customers.
2. EBITDA Margin Rising, Profits Up
Adjusted EBITDA margin captures the true operating profitability of an energy producer by removing accounting noise around depletion and capitalized drilling costs. It reveals how much cash the asset base generates before capital structure and reinvestment requirements shape reported earnings.
Looking at the trend in its profitability, EQT’s EBITDA margin rose by 22.9 percentage points over the last year, as its sales growth gave it immense operating leverage. Its EBITDA margin for the trailing 12 months was 72.7%.
3. Excellent Free Cash Flow Margin Boosts Reinvestment Potential
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
EQT has shown terrific cash profitability, driven by its lucrative business model that enables it to reinvest, return capital to investors, and stay ahead of the competition. The company’s free cash flow margin was among the best in the energy upstream and integrated energy sector, averaging 24% over the last five years.
Final Judgment
These are just a few reasons why we think EQT is a great business, and with its recent outperformance in a weaker market environment, the stock trades at 12.9× forward P/E (or $58.20 per share). Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
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