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EQT Corporation (EQT) Up 16.3% Since Last Earnings Report: Can It Continue?

·5 min read

A month has gone by since the last earnings report for EQT Corporation (EQT). Shares have added about 16.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is EQT Corporation due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

EQT Corporation Beats Q1 Earnings, Revenues Miss

EQT Corporation reported first-quarter 2021 adjusted earnings from continuing operations of 30 cents per share, beating the Zacks Consensus Estimate of 27 cents and increasing from the year-ago figure of 15 cents. The strong first-quarter earnings were backed by increased gas equivalent production volumes and higher realized commodity price realizations. The positives were partially offset by higher processing expenses.

Total operating revenues decreased to $949.9 million from $1,107.1 million in the prior-year quarter. Moreover, the top line missed the Zacks Consensus Estimate of $1,082 million.

Alta Resources Acquisition

EQT Corp. separately announced that it has agreed to acquire Alta Resources Development, an Appalachian basin rival, for a total value of $2.93 billion. The transaction — which will significantly boost the acquirer’s footprint in the basin — will include $1 billion in cash and $1.93 billion in EQT Corp. common stock. The deal, which is expected to conclude in the third quarter, will likely add 1 billion cubic feet equivalent (Bcfe) per day of net production to EQT Corp.’s portfolio.

Q1 Operations:

Production

Sales volumes increased to 415.2 Bcfe of natural gas from the year-ago figure of 385.1 Bcfe. Natural gas sales volume was 390.3 Bcf for the first quarter, up from 369.7 Bcf a year ago. Moreover, total liquids sales volume for the quarter was recorded at 4,148 thousand barrels (MBbls) versus the year-ago period’s 2,555 MBbls.

Commodity Price Realizations

Average realized price was $2.61 per thousand cubic feet of natural gas equivalent (Mcfe), up from $2.49 in the year-ago quarter. Natural gas price was recorded at $2.84 per Mcf, up from the year-ago level of $2.05. Moreover, oil price was recorded at $61.98 per barrel, up from $31.63 in first-quarter 2020. Moreover, ethane sales price was recorded at $6.66 per barrel for the first quarter, higher than the year-ago level of $4.05.

Expenses

Total operating expenses were $1.31 per Mcfe for first-quarter 2021, down from $1.33 in the prior-year period.

Processing expenses were 10 cents per Mcfe, up from the year-ago period’s 8 cents. Gathering expenses were flat year over year at 68 cents per Mcfe. Lease operating expenses were also flat with the year-ago level of 7 cents. However, transmission costs decreased to 30 cents per Mcfe from the year-ago level of 38 cents.

Wells Drilled

The company drilled 17 net wells in the first quarter. While nine wells were drilled in WV Marcellus, eight were drilled at PA Marcellus.

Cash Flows

EQT Corp.’s adjusted operating cash flow was $495.4 million for the quarter, down from $512.6 million a year ago. However, free cash flow for the quarter rose to $258.5 million from the year-ago level of $250.5 million.

Capex & Balance Sheet

Total capital expenditure amounted to $238.2 million for the first quarter, down from $262.1 million a year ago.

As of Mar 31, 2021, the company had $40.7 million in cash and cash equivalents, up sequentially from $18.2 million. Total debt was reported at $4,806 million, down from $4,925.5 million at fourth quarter-end.

Guidance

For 2021, the largest natural gas producer of the United States expects total sales volumes in the band of 1,620-1,700 Bcfe. Moreover, the company projects 2021 total per unit operating costs within $1.29-$1.41 per Mcfe.

Adjusted earnings before interest, taxes, depreciation and amortization for 2021 are expected within $1.85-$1.95 billion. Capital expenditure for the year is expected in the range of $1.025-$1.125 billion. Importantly, free cash flow is now projected in the band of $575-$675 million, up from the previous guidance of $500-$600 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted -39.33% due to these changes.

VGM Scores

At this time, EQT Corporation has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, EQT Corporation has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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