Loss-Making EQT Corporation (NYSE:EQT) Set To Breakeven
EQT Corporation (NYSE:EQT) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. EQT Corporation operates as a natural gas production company in the United States. The US$5.2b market-cap company announced a latest loss of US$967m on 31 December 2020 for its most recent financial year result. As path to profitability is the topic on EQT's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.
View our latest analysis for EQT
Consensus from 9 of the American Oil and Gas analysts is that EQT is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$131m in 2021. Therefore, the company is expected to breakeven roughly a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 85%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for EQT given that this is a high-level summary, though, take into account that by and large energy companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. 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 53%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
Next Steps:
There are too many aspects of EQT to cover in one brief article, but the key fundamentals for the company can all be found in one place – EQT's company page on Simply Wall St. We've also put together a list of essential aspects you should further research:
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.
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.
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.
This article by Simply Wall St is general in nature. 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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