EQT (EQT), a leading energy stock, broke out of a deep cup-with-handle base and remains in buy range from its 46.81 buy point. The company reported fairly positive Q2 earnings results in late July.
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The Pittsburgh-based natural gas exploration and production company owns or leases property in Pennsylvania, West Virginia and Ohio. EQT — appearing in IBD’s Big Cap 20 screen — is ranked fourth in IBD’s integrated Oil & Gas Integrated group.
The group is ranked No. 41 out of the 197 groups IBD tracks. It has fallen out of favor, as it was ranked No. 5 just three months ago.
Energy Stock Breaks Out Of Base
Shares are in the 5% buy zone after gapping up Tuesday and hitting the buy point, according to MarketSmith pattern recognition. The stock has shown a strong relative strength line since March, and shares are climbing back toward a 52-week high of 50.41, hit on June 1.
EQT has a best-possible 99 Relative Strength Rating, measuring the stock’s performance over the last 12 months compared to all stocks in IBD’s database.
Earnings Outperform; Shares Took Time To Catch Up
The company reported better-than-expected Q2 earnings-per-share and sales numbers on July 27.
“We will be further improving our balance sheet with an incremental $1 billion of projected debt reduction by year-end 2023. In total, we plan to return approximately $4 billion to shareholders by the end of next year, with room for further upside if natural gas prices remain strong,” said President and CEO Toby Rice in the earnings report.
The energy stock originally dropped on the report, but climbed back up around mid-August, after word of oil supply pressures. Current strength in natural gas gave the stock its most recent boost.
The company has reported triple-digit quarterly EPS growth for the last five quarters. Analysts expect annual EPS to grow from 92 cents in 2021 to $4.15 in 2022 and $8.01 in 2023.
Sales have been erratic and hard to interpret on a quarterly basis.
EQT Shows Top-Notch Fundamentals
EQT earns a 97 out of 99 Composite Rating, which is a combination of IBD’s five SmartSelect ratings into one, with more weight on EPS and Relative Strength Ratings.
Institutions have a high conviction for the energy stock, with mutual funds owning 69% of shares outstanding. Funds have been adding the stock, as 854 owned it in June, up from 668 in March and 592 in December.
Analysts see a positive horizon for EQT, with Mizuho raising its price target on Aug. 18 to 59 from 55, keeping its buy rating on the stock. Credit Suisse also raised its price target after the earnings release, to 52 from 50.
The company currently has a 1.2% annualized dividend yield. The board announced in July it would increase its quarterly cash dividend by 20% to 15 cents a share, payable Sept. 1 for shareholders of record Aug. 9.
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Source: https://www.investors.com/stock-lists/ibd-big-cap-20/energy-stock-in-the-buy-zone-group-loses-its-high-ranking/?src=A00220&yptr=yahoo