EQT Corp (EQT): Is a Beat in Store this Earnings Season?

Integrated energy company, EQT CorporationEQT is expected to report fourth-quarter 2016 earnings on Feb 2, before the market opens.

In the last quarter, the company incurred a loss of 26 cents per share, substantially narrower than the Zacks Consensus Estimate of a loss of 44 cents. The company had incurred a loss of 33 cent per share in the year-earlier quarter.

Let's see how things are shaping up for this announcement.

EQT Corporation Price and EPS Surprise

EQT Corporation Price and EPS Surprise | EQT Corporation Quote

Earnings Whispers

Our proven model shows that EQT Corp. is likely to beat on earnings this time because it has the right combination of two key ingredients.

Zacks ESP : Earnings ESP , which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +10.00%. This is because the Most Accurate estimate stands at a loss of 9 cents, while the Zacks Consensus Estimate is pegged at a loss of 10 cents. This is very meaningful and a leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter .

Zacks Rank : EQT Corp. carries a Zacks Rank #2 (Buy). Note that stocks with Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of beating earnings. The combination of EQT Corp.'s favorable Zacks Rank and a positive ESP makes us confident about an earnings beat.

Conversely, the Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

Factors Likely to Influence this Quarter

EQT Corp. has almost halved its exploration and production capital spending to $1 billion from the 2015 levels owing to reduced well costs. Despite this, the company has increased its production guidance to 750-755 billion cubic feet equivalent (Bcfe) from 730-740 Bcfe earlier, which reflects its efficiency and should further support growth. This bodes well for its upcoming quarterly results as well.

EQT Corp.'s business primarily comprises production, gathering and transportation of natural gas. Natural gas is known for producing significantly less CO2 - a major pollutant - when burned to produce heat or power. Given that natural gas demand is likely to grow in the future, we expect the company to generate significant cash flows from its operations.

However, EQT Corp. lacks geographical diversification as its resources are concentrated in the Appalachian Basin. This increases the company's risk exposure as any disruption in the region will affect its financials.

Also, EQT Corp.'s upstream operations expose it to commodity price fluctuations, impacting its profitability. Low realizations affected the company's revenues and earnings, which also showed a loss.

Stocks to Consider

Here are some companies in the energy sector that investors may consider, as our model shows that they have the right combination of elements to beat estimates this quarter:

Enterprise Products Partners LP EPD , which is expected to release earnings results on Jan 30, has an Earnings ESP of +3.13% and a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank stocks here .

Cimarex Energy Co. XEC has an Earnings ESP of +1.72% and a Zacks Rank #3. The company is expected to release earnings results on Feb 15.

SM Energy Company SM has an Earnings ESP of +9.52% and a Zacks Rank #3. The company is expected to release earnings results on Feb 28.

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EQT Corporation (EQT): Free Stock Analysis Report

Enterprise Products Partners L.P. (EPD): Free Stock Analysis Report

SM Energy Company (SM): Free Stock Analysis Report

Cimarex Energy Co (XEC): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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