What's in the Cards for EQT Stock this Earnings Season?

Upstream energy player, EQT CorpEQT is expected to release third-quarter 2017 results on Oct 26.

Last quarter, the company reported earnings of 6 cents per share surpassing the Zacks Consensus Estimate of 5 cents. Notably, EQT incurred loss of 35 cents in the year-ago quarter.

EQT Corporation Price and EPS Surprise

EQT Corporation Price and EPS Surprise | EQT Corporation Quote

Which Way are Estimates Treading?

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

In the last seven days, two estimates have been raised, taking the Zacks Consensus Estimate to a loss of 2 cents for the third quarter. It reflects year-over-year improvement of about 92.3% from the year-ago quarter.

Further, analysts polled by Zacks expect revenues of $650.1 million for the impending quarter was up 16.8% from the year-ago quarter.

Factors to Consider

During 2017, EQT is expected to spend $1.5 billion, out of which $1.3 billion will be allocated toward 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.

Per the Zacks Consensus Estimate, the average daily sales volume for the current quarter is estimated at 2,303 million cubic feet equivalent per day (MMcfe/d), which is higher than 2,177 MMcfe/d in the preceding quarter and 2,131 MMcfe/d in the year-ago quarter. The figure is also higher than the company's projection of 205-210 Bcfe.

The company stands to benefit as the midstream business might rake more profits for EQT given the fact that U.S. drillers continue to bank on shale plays. With the rise in production, demand for midstream assets for gathering and transmission activities is likely to scale higher.

However, during first-half 2017, EQT's operating expenses related to transportation and processing activities surged more than 66%. 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 Q3

During the quarter, EQT has outperformed the industry . The stock has gained 11.3% compared with the industry's growth of 5%.

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 both 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 -163.91% as the Most Accurate estimate is pegged at a loss of 6 cents, while the Zacks Consensus Estimate is of a loss of 2 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 deliveran earnings beat this quarter:

Noble Midstream Partners LP NBLX , headquartered in Houston, TX, has diversified energy infrastructure properties. The company has an Earnings ESP of +1.91% and flaunts a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here

Tesoro Corporation ANDV , based in San Antonio, TX, operates as the refiner and marketer of petroleum products. The company has an Earnings ESP of +5.02% and carries a Zacks Rank #3.

Gulfport Energy Corporation GPOR owns and operates mature oil and gas properties in the Louisiana Gulf Coast area. The company has an Earnings ESP of +0.97% and carries a Zacks Rank #3.

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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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