What's In The Cards For EQT Stock This Earnings Season?

EQT Corp (NYSE:EQT) is expected to release fourth-quarter 2017 results on Feb 15.

Last quarter, the company reported earnings of 12 cents per share against the Zacks Consensus Estimate of a loss of 5 cents. The bottom line also improved from a loss of 28 cents in the prior-year quarter.

Which Way are Estimates Trending?

Let’s look at the estimate revisions to get a clear picture of what analysts are thinking about the company before earnings release.

The Zacks Consensus Estimate of 22 cents for fourth-quarter earnings has been revised downward over the last 30 days, with one firm being bullish and five firms taking a bearish stance. The figure reflects a year-over-year decline of 12%.

Further, analysts polled by Zacks expect revenues of $886.5 million for the fourth quarter, up 133.9% from the year-ago quarter.

Factors to Consider

Per the Zacks Consensus Estimate, the average daily sales volume for the current quarter is pegged at 2,860 million cubic feet equivalent per day (MMcfe/d), which is higher than 2,229 MMcfe/d in the preceding quarter and 2,157 MMcfe/d in the year-ago quarter.

The Zacks Consensus Estimate for oil sales volume per day is 295 thousand barrels of oil equivalent per day (Mboe/d), showing an improvement of 246 Mboe/d in the preceding quarter.

Analysts polled by Zacks expect natural gas volumes per day of 235 mcf, increasing from 205 mcf in the preceding quarter.

The Zacks Consensus Estimate for natural gas liquids sales volume per day is 5,148 Mboe/d, up from 3,176 Mboe/d in the preceding quarter.

The Zacks Consensus Estimate for revenues in Production segment is pegged $812 million, showing an increase from $598 million in the last quarter and $318 million in the year-ago quarter.

During 2017, EQT is likely to spend $1.5 billion, out of which $1.3 billion will be allocated to well developments. A total of 207 wells will be drilled comprising 119 Marcellus wells. The entire funding will be done through cash on hand and operating cash flow, reflecting the company’s strong balance sheet.

However, during the first nine months of 2017, EQT’s expenses related to transportation and processing activities surged more than 61%. If the trend continues, the company’s revenues might be hurt.

Moreover, EQT lacks geographical diversification as its resources are concentrated in the Appalachian Basin. This increases risk exposure of the company as any disruptions in the region will affect financials.

Price Performance in Q4

During the quarter, EQT has underperformed the industry. The stock has lost 12.8% against the industry's rally of 9%.

Earnings Whispers

Our proven model does not show that EQT is likely to beat earnings this quarter. That is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: EQT has an Earnings ESP of -7.32% as the Most Accurate estimate is pegged at 20 cents, while the Zacks Consensus Estimate is 22 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: EQT carries a Zacks Rank #3.

Note that we caution investors against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Though earnings beat looks uncertain for EQT, here are some firms that you may want to consider on the basis of our model. These have the right combination of elements to deliver an earnings beat this quarter:

Houston, TX-based EOG Resources (NYSE:EOG) is a major independent oil and gas exploration and production company. The company has an Earnings ESP of +4.06% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Continental Resources (NYSE:CLR) is an independent oil and natural gas exploration and production company. The company has an Earnings ESP of +0.68% and sports a Zacks Rank #1.

Headquartered in Woodlands, TX, Newfield Exploration (NYSE:NFX) is an independent energy company engaged in the exploration and production (E&P) of crude oil and natural gas. The company has an Earnings ESP of +1.64% and carries a Zacks Rank #3.

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