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Will Lower Gas Prices Affect EQT Corp.'s (EQT) Q3 Earnings?

EQT Corporation EQT is set to report third-quarter 2020 results on Oct 22, before the opening bell.

In the last reported quarter, this upstream company’s adjusted loss per share of 18 cents was wider than the Zacks Consensus Estimate of a loss of 15 cents due to a year-over-year decrease in natural gas equivalent production volumes and lower commodity price realizations, partially offset by low per unit operating expenses.

Notably, the company beat the Zacks Consensus Estimate for the bottom line twice in the prior four quarters and missed the same on the other two occasions. This is depicted in the graph below:

EQT Corporation Price and EPS Surprise

EQT Corporation Price and EPS Surprise

EQT Corporation price-eps-surprise | EQT Corporation Quote

Let’s see how things have shaped up prior to this announcement.

Trend in Estimate Revision

The Zacks Consensus Estimate for the company’s third-quarter loss per share of 19 cents has witnessed four upward revisions and one downward movement over the past 30 days. The estimated figure suggests a decline of 216.7% from the prior-year reported number.

The consensus estimate for third-quarter revenues of $867.6 million indicates an 8.8% decline from the year-ago reported figure.

Factors to Consider

The natural gas producer has been strategically executing volume curtailments to enhance net asset value amid current market uncertainties. It curtailed around 425 million cubic feet of natural gas per day of net production on Sep 1, 2020. Production is likely to have been restored in the third quarter. As such, production for the third quarter is anticipated to have risen sequentially. However, EQT Corp.’s guidance for total sales volumes is expected in the 360-380 Billion cubic feet equivalent (Bcfe) range for third-quarter 2020, indicating a marginal decline from the year-ago figure of 381 Bcfe.

The Zacks Consensus Estimate for third-quarter average crude oil price is pegged at $25.27 per barrel, indicating a decline from the year-ago period’s $39.01. Moreover, the same for average natural gas liquids price (including cash settled derivatives) is pegged at $16.74 per barrel, signaling fall from the year-ago figure of $20.74. Also, the Zacks Consensus Estimate for third-quarter average natural gas price (including cash settled derivatives) is pegged at $2.31 per thousand cubic feet, suggesting a decrease from the year-ago figure of $2.45.

In conclusion, a marginal decline in year-over-year sales volumes and lower commodity price realizations are likely to have affected the company’s third-quarter profits.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for EQT Corp. this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here as you will see below.

Earnings ESP: Earnings ESP for the company is -21.06%. This is because the Most Accurate Estimate of a loss of 23 cents per share is wider than the Zacks Consensus Estimate of a loss of 19 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.  

Zacks Rank: It currently carries a Zacks Rank #3.

Energy Stocks With Favorable Combination

Here are some companies from the Energy space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

EOG Resources, Inc. EOG has an Earnings ESP of +200.99% and is a Zacks #2 Ranked player. The company is scheduled to release third-quarter results on Nov 5. You can see the complete list of today’s Zacks #1 Rank stocks here.

Range Resources Corporation RRC has an Earnings ESP of +100.00% and a Zacks Rank of #1. It is scheduled to report third-quarter results on Oct 29.

Pioneer Natural Resources Company PXD has an Earnings ESP of +28.88% and holds a Zacks Rank #3. It is set to report third-quarter results on Nov 4.

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EQT Corporation (EQT): Free Stock Analysis Report
 
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Range Resources Corporation (RRC): 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.

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