Over the last six months, EQT’s shares have sunk to $54.63, producing a disappointing 11.4% loss - a stark contrast to the S&P 500’s 12.3% gain. This might have investors contemplating their next move.
Following the drawdown, is now an opportune time to buy EQT? 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. Luckily, EQT’s sales grew at an impressive 17.8% compounded annual growth rate over the last five years. 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.
Analyzing the trend in its profitability, EQT’s EBITDA margin rose by 22.5 percentage points over the last year, as its sales growth gave it immense operating leverage. Its EBITDA margin for the trailing 12 months was 77.9%.
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 an eye-popping 30.6% over the last five years.
Final Judgment
These are just a few reasons EQT is a high-quality business worth owning. With the recent decline, the stock trades at 16.1× forward P/E (or $54.63 per share). Is now a good time to initiate a position? See for yourself in our full research report, it’s free.
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