A month has gone by since the last earnings report for EQT (EQT). Shares have added about 6.7% 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 due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

EQT Corp’s Q4 Earnings are in Line With Estimates & Surges Y/Y

EQT Corporation posted fourth-quarter 2018 adjusted earnings per share of 79 cents, which was in line with the Zacks Consensus Estimate. The figure increased 46.3% from 54 cents in the year-ago quarter. Higher production sales volume and increased realizations supported the company’s fourth-quarter 2018 results.

In 2018, the company reported adjusted earnings of $1.70 per share, which missed the Zacks Consensus Estimate of $2.62. Nevertheless, the figure increased from 54 cents a year ago.

Net operating revenues in the quarter totaled $1,245.1 million, which surpassed the Zacks Consensus Estimate of $1,257 million. Also, the figure improved from $1,129 million in the year-ago quarter.

In 2018, net operating revenues surged 47.4% year over year to $4,557.9 million. However, the figure lagged the Zacks Consensus Estimate of $4,830.0 million. The divestitures of Permian Basin and Non-Core Huron assets affected the company’s revenues.

The company completed the separation of its midstream business, forming a leading pure play upstream company and a leading pure play midstream company — Equitrans Midstream Corporation (ETRN). Subsequent to the simplification of EQT Corp’s corporate structure, it continues to hold the upstream business, which is the largest producer of natural gas in the United States based on average daily sales volume.

Production and Price Realization

Sales volume rose to 394 billion cubic feet equivalent (Bcfe) of natural gas from the year-ago quarter’s tally of 294 Bcfe. Also, the figure exceeded the guidance. Average realized price of natural gas equivalents was $3.13 per thousand cubic feet, up 3% from $3.04 a year ago.

Expenses

Total cash operating expenses were $1.53 per unit in the fourth quarter of 2018 compared with $1.59 in the prior-year quarter. Processing expenses were 9 cents during the fourth quarter of 2018 compared with 16 cents in the fourth quarter of 2017.

Financials

The company’s adjusted operating cash flow was $692.6 million during the quarter, up from $465.4 million a year ago. EQT Corp’s capital expenditures totaled around $558 million in the fourth quarter.

Wells Drilled

The company spud 133 gross wells in 2018. Of the total, 104 wells were drilled in the PA Marcellus with an average length-of-pay of 11,700 feet, 12 were drilled in the WV Marcellus with an average length-of-pay of 5,500 feet and 17 were drilled in Utica with an average length-of-pay of 12,400 feet.

Reserves Replacement

At the end of 2018, oil and gas proved reserves were 21.8 trillion cubic feet equivalent (Tcfe), up about 2% from 2017. Adjusting for the impact of the divestitures in 2018, the company’s proved reserves increased 11% or 2.1 Tcfe and proved developed reserves increased 21%. The company had 11.6Tcfe of proved developed reserves as of Dec 31, 2018.

Guidance

Production sales volume for 2019 is expected in the range of 1,470-1,510 Bcfe. Liquids volume is projected in the band of 8,200-8,400 thousand barrels (MBBl). Of this, first-quarter 2019 volume is estimated in the range of 360-380 Bcfe with liquids of 1,985-2,085 MBBls.

The company projects 2019 gathering costs and selling, general and administration (SG&A) costs in the range of 55-57 cents per Mcfe and 11-13 cents per Mcfe, respectively.

Adjusted operating cash flow for 2019 is expected in the range of $2.2 -$2.3 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, EQT has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

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

Outlook

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

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