EQT is Monday's IBD Stock Of The Day, as the natural gas producer broke out past a buy point with U.S. natural gas prices spiking on an expected demand increase. EQT stock advanced Monday.
U.S. natural gas futures jumped 3% Monday, hovering around $2.62 per million British thermal units, pressured by hotter-than-usual weather and the threat of a production strike in Australia. U.S. natural gas prices are down around 60% from the same time last year when futures spiked to 14-year highs as Russia's invasion of Ukraine sparked fears of an energy crisis in Europe.
EQT, headquartered in Pittsburgh, is one of the world's largest natural gas producers. EQT focuses its natural gas production operations in the Marcellus and Utica shales, which are located in the Appalachian basin. EQT operations are primarily in Pennsylvania and West Virginia, with smaller holdings in Ohio.
On July 25, EQT topped Wall Street's Q2 estimates, reporting a better-than-expected loss and revenue. The loss broke a string of nine straight quarterly profits for the company. EQT's total natural gas sales fell to $913 million for the quarter, compared with $1.43 billion a year earlier, on lower volumes and prices.
However, EQT Chief Financial Officer Jeremy Knop told analysts in July that the company's liquefied natural gas (LNG) business performance "remained strong as Europe and China listed U.S. cargoes to refill storage and meet demand from record-breaking heat realized in May and June."
Knop added that LNG capacity increases continuing through 2025 "should create a significant tailwind for natural gas fundamentals over the next several years."
EQT Stock
EQT stock advanced 2.8% to 44.69 Monday during market trading. The gain lifted the stock past a buy point in above-average volume before shares settled back below the entry.
The stock is in a cup-with-handle base with an official 44.36 buy point, according to MarketSmith analysis. However, EQT has formed a 46%-deep base. That is well beyond the 35% maximum for standard bases. This extra depth can add possible risk to a breakout.
EQT stock is up around 39% in 2023, easily outpacing the S&P 500 index's 14% gain.
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The U.S. Energy Information Administration (EIA) on Aug. 8 reported that natural gas production will remain relatively flat for the rest of 2023 and 2024. The EIA estimates a 1% increase in natural gas production in 2023 vs. last year.
"Production has remained at relatively high levels throughout 2023 despite a decline in U.S. natural gas prices," The EIA wrote.
Analysts predict a loss of 4 cents per share in the third quarter, down from a $1.04 profit a year ago. Wall Street sees revenue falling 31% in Q3. However, analysts see earnings and sales picking up in Q4.
Wall Street consensus has EQT finishing 2023 with EPS falling 27% to $2.26 and sales increasing 1% to $6.23 billion, according to FactSet.
EQT stock is ninth in the Oil & Gas-Integrated industry group. The stock has a Composite Rating of 70 out of 99 and an 88 Relative Strength Rating. EQT shares have an EPS Rating of 29 out of 99.
Other recent energy-related IBD Stock Of The Day companies include Diamond Offshore, SLB and FlowServe.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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