EQT Corporation Q2 FY12/24 Earnings Review
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And Now, Big Gas.
by Alex King, CEO, Cestrian Capital Research, Inc.
Background - Sector Rotation - Yet Again
ONE MORE TIME with this.
Energy stocks are, I believe, under accumulation at present. I don't think a near-term breakout is on the cards; I don't think this is a momentum opportunity; but speaking personally I have positions in each of the energy stocks and ETFs that comprise the Energy Sector Model Portfolio in our Inner Circle service.
Why?
Because sector rotation.
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At the present time, tech stocks are in the ascendant and if you want to stay ahead of the market, tech remains a compelling place to be. The rate cut cycle will likely help that. But just as sector X is moving up, you can bet that Big Money is quietly accumulating positions in sector Y which has yet to move up - so that when the news breaks and momentum investors everywhere pour into Sector Y, bigs have already loaded up.
Energy stocks I suspect are being accumulated because (1) they are out of fashion, having mooned in 2022 (2) geopolitics continues to get ugly and oil is a useful asset class to own at such a time and (3) inflation.
"Inflation?", you may say. "What inflation? There is no inflation - Chairman Powell just told us it was beaten!". Well, that 50bps cut just saw US government bonds sell off and oil move up. Bonds are saying that inflation is likely to rear its head once more, and oil is saying that if tech and bonds swoon, oil will likely hold up. You can see this play out daily in our Market On Open notes.
EQT Corporation ($EQT)
Read on below the paywall for the financial detail, valuation, our stock chart and rating.
About EQT
(courtesy of Google Gemini, with a few edits by the wetware)
EQT Corporation's primary business activity is the production of natural gas. The company is a leading independent natural gas producer in the United States, primarily in Pennsylvania, West Virginia, and Ohio.
(now solely wetware authored, since Gemini seems rather enamored of this company and not very interested in critique!)
This is an M&A driven business; the most recent transaction was the acquisition of Equitrans, a pipeline business. As with all M&A driven companies it is hard to get a grip on fundamentals looking solely at the reported numbers; you need to be sat with the CFO going line by line through the numbers of each and every unit to get a real picture of things. As a public stock investor on the outside, I believe the best available method is to - of course - read the numbers and earnings reports and such, but to focus clearly on the share count and the leverage ratios, because that’s where you will see problems arising first if the M&A strategy is off kilter. The numbers presented below - as published in their Q2 report - don’t yet fully factor in the Equitrans deal, so for now they are best used as a placeholder. The stock chart is where the action is right now.