EQT Beats Industry While Trading Cheaply: What Investors Should Know

Shares of EQT Corporation EQT have gained 24.6% in the past six months, outperforming the oil-energy sector and the Zacks S&P 500 composite’s declines of 15.6% and 0.9%, respectively. The company has a market capitalization of $32.3 billion.

Positive Outlook on EQT’s Growth Trajectory

The Zacks Consensus Estimate for EQT Corp’s 2025 earnings per share indicates a year-over-year increase of 116.2%. The consensus estimate for revenues is pegged at $8.1 billion, suggesting a 32.4% year-over-year improvement.

Long-term earnings growth is expected to be 46.3%, better than the industry average of 16.9%. EQT has an impressive Growth Score of A. This style score helps analyze the growth prospects of a company.

Average Target Price for EQT Suggests Upside

Based on short-term price targets offered by 21 analysts, the Zacks average price target is $60.14 per share. The average suggests an 11.4% upside from the last closing price.

EQT Shares Are Cheap

EQT shares are trading at a discount to the industry. Its price-to-book value of 1.36X is lower than the industry average of 3.28X. Shares of other energy companies like Antero Resources AR, Permian Resources Corporation PR and Northern Oil and Gas NOG are also trading at a multiple lower than the industry average.

Factors to Consider

With a primary focus on the Appalachian Basin, EQT Corp is the largest natural gas producer in the United States. The company employs advanced technologies, such as horizontal drilling, to operate in the prolific gas basin. It has several untapped premium oil and natural gas drilling locations in the core Appalachian Basin, contributing to an optimistic production outlook.

EQT’s $1.8-billion acquisition of Olympus Energy is expected to yield an attractive 15% unlevered free cash flow yield and a 3.4X adjusted EBITDA multiple over 2025-2027. The bolt-on acquisition adds 90,000 net acres adjacent to the company’s core footprint, 500 MMcf/d of production, and long-term breakevens aligned with the company’s already low-cost profile.

The company also stands out for its environmental leadership, having achieved its Scope 1 and 2 net-zero goal ahead of schedule. Emission reductions from pneumatic device replacements, frac fleet electrification, and offset projects, such as a 10-million-ton carbon sequestration initiative with West Virginia, demonstrate a scalable ESG model at low cost.

In the first quarter of 2025, EQT generated more than $1.04 billion in free cash flow, nearly double that of its closest peer, demonstrating the strength of its vertically integrated platform and disciplined cost structure. Operating costs and capital expenditures were significantly below guidance, and average realized pricing was enhanced through tactical production maneuvers that responded effectively to favorable winter market dynamics.

EQT Corp has investment-grade credit ratings from S&P and Fitch with a stable outlook. Notably, the exploration and production company is diligently working to lower its debt burden, evident in the continuous strides toward achieving a long-term debt target of $5-7 billion.

Risks

One significant risk factor of EQT Corp relates to commodity price volatility, particularly in the natural gas market. EQT highlights that fluctuations in natural gas prices can significantly impact their business operations. These price swings are influenced by various external forces, including global energy demand, weather patterns, supply disruptions, geopolitical events and regulatory developments.

The company acknowledges that natural gas markets have entered an era of heightened volatility, characterized by “fat tail” price distributions post-2020, where prices can rapidly oscillate between extreme lows and highs due to tighter infrastructure, globalized demand, and limited storage relative to consumption needs. This elevated unpredictability can challenge EQT’s ability to forecast revenues, manage costs, and make long-term capital allocation decisions effectively.

Hence, it is better to stay cautious about this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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