Intrinsic value of EQT - EQT

Previous Close

$55.68

  Intrinsic Value

$14.15

stock screener

  Rating & Target

str. sell

-75%

Previous close

$55.68

 
Intrinsic value

$14.15

 
Up/down potential

-75%

 
Rating

str. sell

We calculate the intrinsic value of EQT stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 10.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  5,405
  8,350
  12,488
  18,120
  25,564
  35,145
  47,174
  61,943
  79,706
  100,675
  125,015
  152,843
  184,227
  219,194
  257,733
  299,805
  345,351
  394,295
  446,560
  502,066
  560,741
  622,523
  687,367
  755,242
  826,138
  900,064
  977,052
  1,057,153
  1,140,440
  1,227,006
Variable operating expenses, $m
  1,544
  2,236
  3,209
  4,532
  6,282
  8,534
  11,361
  14,832
  19,007
  23,936
  29,383
  35,923
  43,300
  51,518
  60,576
  70,465
  81,169
  92,673
  104,957
  118,003
  131,794
  146,315
  161,555
  177,508
  194,171
  211,546
  229,641
  248,468
  268,043
  288,389
Fixed operating expenses, $m
  1,441
  1,473
  1,505
  1,538
  1,572
  1,607
  1,642
  1,678
  1,715
  1,753
  1,791
  1,831
  1,871
  1,912
  1,954
  1,997
  2,041
  2,086
  2,132
  2,179
  2,227
  2,276
  2,326
  2,377
  2,429
  2,483
  2,537
  2,593
  2,650
  2,709
Total operating expenses, $m
  2,985
  3,709
  4,714
  6,070
  7,854
  10,141
  13,003
  16,510
  20,722
  25,689
  31,174
  37,754
  45,171
  53,430
  62,530
  72,462
  83,210
  94,759
  107,089
  120,182
  134,021
  148,591
  163,881
  179,885
  196,600
  214,029
  232,178
  251,061
  270,693
  291,098
Operating income, $m
  2,420
  4,642
  7,774
  12,049
  17,710
  25,004
  34,171
  45,433
  58,983
  74,986
  93,841
  115,089
  139,056
  165,763
  195,202
  227,343
  262,140
  299,536
  339,471
  381,884
  426,720
  473,933
  523,486
  575,357
  629,537
  686,035
  744,873
  806,092
  869,746
  935,908
EBITDA, $m
  5,956
  9,955
  15,586
  23,260
  33,414
  46,491
  62,919
  83,095
  107,367
  136,027
  169,300
  207,345
  250,256
  298,069
  350,770
  408,306
  470,594
  537,533
  609,014
  684,931
  765,183
  849,688
  938,381
  1,031,221
  1,128,194
  1,229,313
  1,334,622
  1,444,189
  1,558,116
  1,676,528
Interest expense (income), $m
  145
  403
  934
  1,700
  2,776
  4,241
  6,176
  8,668
  11,796
  15,637
  20,256
  25,709
  32,039
  39,276
  47,437
  56,530
  66,553
  77,494
  89,338
  102,066
  115,658
  130,092
  145,351
  161,417
  178,280
  195,931
  214,368
  233,592
  253,613
  274,444
  296,103
Earnings before tax, $m
  2,017
  3,708
  6,074
  9,273
  13,470
  18,828
  25,503
  33,636
  43,347
  54,730
  68,132
  83,050
  99,781
  118,326
  138,672
  160,791
  184,646
  210,198
  237,405
  266,226
  296,628
  328,582
  362,069
  397,077
  433,606
  471,667
  511,281
  552,478
  595,302
  639,805
Tax expense, $m
  544
  1,001
  1,640
  2,504
  3,637
  5,084
  6,886
  9,082
  11,704
  14,777
  18,396
  22,423
  26,941
  31,948
  37,441
  43,413
  49,854
  56,754
  64,099
  71,881
  80,090
  88,717
  97,759
  107,211
  117,074
  127,350
  138,046
  149,169
  160,732
  172,747
Net income, $m
  1,472
  2,707
  4,434
  6,769
  9,833
  13,744
  18,617
  24,554
  31,643
  39,953
  49,736
  60,626
  72,840
  86,378
  101,231
  117,377
  134,792
  153,445
  173,305
  194,345
  216,539
  239,865
  264,310
  289,866
  316,532
  344,317
  373,235
  403,309
  434,571
  467,058

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  47,411
  73,249
  109,544
  158,943
  224,246
  308,286
  413,811
  543,359
  699,172
  883,111
  1,096,623
  1,340,727
  1,616,026
  1,922,752
  2,260,815
  2,629,871
  3,029,391
  3,458,730
  3,917,191
  4,404,086
  4,918,779
  5,460,732
  6,029,535
  6,624,929
  7,246,821
  7,895,298
  8,570,630
  9,273,271
  10,003,857
  10,763,207
Adjusted assets (=assets-cash), $m
  47,411
  73,249
  109,544
  158,943
  224,246
  308,286
  413,811
  543,359
  699,172
  883,111
  1,096,623
  1,340,727
  1,616,026
  1,922,752
  2,260,815
  2,629,871
  3,029,391
  3,458,730
  3,917,191
  4,404,086
  4,918,779
  5,460,732
  6,029,535
  6,624,929
  7,246,821
  7,895,298
  8,570,630
  9,273,271
  10,003,857
  10,763,207
Revenue / Adjusted assets
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
  0.114
Average production assets, $m
  32,623
  50,403
  75,378
  109,369
  154,304
  212,133
  284,745
  373,888
  481,103
  607,672
  754,591
  922,559
  1,111,994
  1,323,054
  1,555,676
  1,809,625
  2,084,536
  2,379,966
  2,695,435
  3,030,469
  3,384,632
  3,757,552
  4,148,947
  4,558,640
  4,986,566
  5,432,786
  5,897,485
  6,380,975
  6,883,694
  7,406,206
Working capital, $m
  -1,049
  -1,620
  -2,423
  -3,515
  -4,959
  -6,818
  -9,152
  -12,017
  -15,463
  -19,531
  -24,253
  -29,652
  -35,740
  -42,524
  -50,000
  -58,162
  -66,998
  -76,493
  -86,633
  -97,401
  -108,784
  -120,770
  -133,349
  -146,517
  -160,271
  -174,612
  -189,548
  -205,088
  -221,245
  -238,039
Total debt, $m
  17,296
  31,482
  51,408
  78,528
  114,379
  160,517
  218,450
  289,572
  375,113
  476,096
  593,314
  727,327
  878,467
  1,046,859
  1,232,456
  1,435,067
  1,654,404
  1,890,111
  2,141,806
  2,409,111
  2,691,678
  2,989,210
  3,301,483
  3,628,354
  3,969,773
  4,325,787
  4,696,544
  5,082,294
  5,483,386
  5,900,269
Total liabilities, $m
  26,028
  40,214
  60,140
  87,260
  123,111
  169,249
  227,182
  298,304
  383,845
  484,828
  602,046
  736,059
  887,198
  1,055,591
  1,241,188
  1,443,799
  1,663,136
  1,898,843
  2,150,538
  2,417,843
  2,700,410
  2,997,942
  3,310,215
  3,637,086
  3,978,505
  4,334,519
  4,705,276
  5,091,026
  5,492,118
  5,909,001
Total equity, $m
  21,382
  33,035
  49,404
  71,683
  101,135
  139,037
  186,629
  245,055
  315,326
  398,283
  494,577
  604,668
  728,828
  867,161
  1,019,628
  1,186,072
  1,366,255
  1,559,887
  1,766,653
  1,986,243
  2,218,369
  2,462,790
  2,719,320
  2,987,843
  3,268,316
  3,560,780
  3,865,354
  4,182,245
  4,511,740
  4,854,206
Total liabilities and equity, $m
  47,410
  73,249
  109,544
  158,943
  224,246
  308,286
  413,811
  543,359
  699,171
  883,111
  1,096,623
  1,340,727
  1,616,026
  1,922,752
  2,260,816
  2,629,871
  3,029,391
  3,458,730
  3,917,191
  4,404,086
  4,918,779
  5,460,732
  6,029,535
  6,624,929
  7,246,821
  7,895,299
  8,570,630
  9,273,271
  10,003,858
  10,763,207
Debt-to-equity ratio
  0.810
  0.950
  1.040
  1.100
  1.130
  1.150
  1.170
  1.180
  1.190
  1.200
  1.200
  1.200
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.220
  1.220
  1.220
  1.220
Adjusted equity ratio
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451
  0.451

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,472
  2,707
  4,434
  6,769
  9,833
  13,744
  18,617
  24,554
  31,643
  39,953
  49,736
  60,626
  72,840
  86,378
  101,231
  117,377
  134,792
  153,445
  173,305
  194,345
  216,539
  239,865
  264,310
  289,866
  316,532
  344,317
  373,235
  403,309
  434,571
  467,058
Depreciation, amort., depletion, $m
  3,536
  5,314
  7,811
  11,210
  15,704
  21,487
  28,748
  37,662
  48,384
  61,041
  75,459
  92,256
  111,199
  132,305
  155,568
  180,962
  208,454
  237,997
  269,544
  303,047
  338,463
  375,755
  414,895
  455,864
  498,657
  543,279
  589,748
  638,097
  688,369
  740,621
Funds from operations, $m
  5,008
  8,020
  12,246
  17,980
  25,537
  35,231
  47,365
  62,217
  80,027
  100,994
  125,195
  152,882
  184,039
  218,683
  256,798
  298,340
  343,245
  391,441
  442,849
  497,392
  555,002
  615,620
  679,205
  745,730
  815,189
  887,596
  962,983
  1,041,407
  1,122,940
  1,207,678
Change in working capital, $m
  -393
  -571
  -803
  -1,093
  -1,444
  -1,859
  -2,334
  -2,865
  -3,446
  -4,068
  -4,722
  -5,399
  -6,089
  -6,784
  -7,477
  -8,162
  -8,836
  -9,495
  -10,139
  -10,768
  -11,383
  -11,986
  -12,580
  -13,168
  -13,754
  -14,342
  -14,936
  -15,540
  -16,158
  -16,794
Cash from operations, $m
  5,401
  8,592
  13,048
  19,072
  26,981
  37,090
  49,699
  65,082
  83,473
  105,062
  129,917
  158,281
  190,128
  225,467
  264,275
  306,502
  352,081
  400,936
  452,988
  508,160
  566,385
  627,606
  691,784
  758,898
  828,943
  901,937
  977,919
  1,056,946
  1,139,098
  1,224,472
Maintenance CAPEX, $m
  -2,039
  -3,262
  -5,040
  -7,538
  -10,937
  -15,430
  -21,213
  -28,474
  -37,389
  -48,110
  -60,767
  -75,459
  -92,256
  -111,199
  -132,305
  -155,568
  -180,962
  -208,454
  -237,997
  -269,544
  -303,047
  -338,463
  -375,755
  -414,895
  -455,864
  -498,657
  -543,279
  -589,748
  -638,097
  -688,369
New CAPEX, $m
  -12,232
  -17,780
  -24,975
  -33,992
  -44,935
  -57,829
  -72,612
  -89,143
  -107,215
  -126,569
  -146,919
  -167,969
  -189,435
  -211,059
  -232,622
  -253,949
  -274,911
  -295,430
  -315,469
  -335,034
  -354,162
  -372,920
  -391,396
  -409,693
  -427,927
  -446,220
  -464,699
  -483,490
  -502,719
  -522,512
Cash from investing activities, $m
  -14,271
  -21,042
  -30,015
  -41,530
  -55,872
  -73,259
  -93,825
  -117,617
  -144,604
  -174,679
  -207,686
  -243,428
  -281,691
  -322,258
  -364,927
  -409,517
  -455,873
  -503,884
  -553,466
  -604,578
  -657,209
  -711,383
  -767,151
  -824,588
  -883,791
  -944,877
  -1,007,978
  -1,073,238
  -1,140,816
  -1,210,881
Free cash flow, $m
  -8,870
  -12,450
  -16,967
  -22,457
  -28,891
  -36,169
  -44,126
  -52,536
  -61,131
  -69,618
  -77,769
  -85,147
  -91,563
  -96,792
  -100,653
  -103,015
  -103,792
  -102,947
  -100,478
  -96,417
  -90,824
  -83,777
  -75,366
  -65,690
  -54,848
  -42,939
  -30,058
  -16,292
  -1,719
  13,591
Issuance/(repayment) of debt, $m
  9,826
  14,185
  19,926
  27,120
  35,851
  46,138
  57,933
  71,122
  85,541
  100,982
  117,218
  134,013
  151,140
  168,393
  185,597
  202,612
  219,336
  235,707
  251,695
  267,305
  282,566
  297,532
  312,273
  326,871
  341,419
  356,014
  370,757
  385,750
  401,092
  416,883
Issuance/(repurchase) of shares, $m
  6,590
  8,947
  11,935
  15,510
  19,619
  24,158
  28,974
  33,872
  38,628
  43,003
  46,558
  49,464
  51,320
  51,955
  51,236
  49,067
  45,392
  40,187
  33,461
  25,244
  15,588
  4,556
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  16,416
  23,132
  31,861
  42,630
  55,470
  70,296
  86,907
  104,994
  124,169
  143,985
  163,776
  183,477
  202,460
  220,348
  236,833
  251,679
  264,728
  275,894
  285,156
  292,549
  298,154
  302,088
  312,273
  326,871
  341,419
  356,014
  370,757
  385,750
  401,092
  416,883
Total cash flow (excl. dividends), $m
  7,546
  10,682
  14,894
  20,173
  26,579
  34,127
  42,781
  52,459
  63,038
  74,368
  86,008
  98,330
  110,897
  123,556
  136,179
  148,664
  160,936
  172,947
  184,679
  196,132
  207,330
  218,311
  236,906
  261,181
  286,571
  313,075
  340,699
  369,458
  399,373
  430,474
Retained Cash Flow (-), $m
  -8,062
  -11,653
  -16,369
  -22,279
  -29,451
  -37,902
  -47,591
  -58,427
  -70,271
  -82,956
  -96,294
  -110,091
  -124,160
  -138,333
  -152,466
  -166,444
  -180,183
  -193,632
  -206,766
  -219,589
  -232,127
  -244,421
  -256,530
  -268,522
  -280,473
  -292,463
  -304,575
  -316,891
  -329,494
  -342,467
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  95
  151
  234
  350
  507
  716
  984
  1,321
  1,734
  2,232
  2,819
  3,500
  4,280
  5,158
  6,137
  7,217
  8,395
  9,670
  11,040
  12,504
  14,058
  15,701
  17,431
  19,246
  21,147
  23,132
  25,202
  27,357
  29,600
  31,932
Cash available for distribution, $m
  -517
  -971
  -1,475
  -2,106
  -2,873
  -3,775
  -4,810
  -5,968
  -7,233
  -8,588
  -10,287
  -11,760
  -13,263
  -14,777
  -16,287
  -17,780
  -19,248
  -20,685
  -22,088
  -23,457
  -24,797
  -26,110
  -19,624
  -7,341
  6,098
  20,612
  36,124
  52,567
  69,878
  88,007
Discount rate, %
  6.00
  6.30
  6.62
  6.95
  7.29
  7.66
  8.04
  8.44
  8.86
  9.31
  9.77
  10.26
  10.78
  11.31
  11.88
  12.47
  13.10
  13.75
  14.44
  15.16
  15.92
  16.72
  17.55
  18.43
  19.35
  20.32
  21.33
  22.40
  23.52
  24.70
PV of cash for distribution, $m
  -487
  -860
  -1,217
  -1,610
  -2,020
  -2,425
  -2,799
  -3,120
  -3,368
  -3,527
  -3,688
  -3,642
  -3,507
  -3,295
  -3,024
  -2,711
  -2,375
  -2,034
  -1,703
  -1,394
  -1,115
  -871
  -476
  -127
  73
  168
  195
  183
  153
  117
Current shareholders' claim on cash, %
  61.2
  39.9
  27.3
  19.5
  14.4
  11.0
  8.7
  7.1
  5.9
  5.0
  4.4
  3.9
  3.5
  3.2
  3.0
  2.8
  2.7
  2.6
  2.5
  2.5
  2.4
  2.4
  2.4
  2.4
  2.4
  2.4
  2.4
  2.4
  2.4
  2.4

EQT Corporation is a natural gas company. The Company operates through three segments: EQT Production, EQT Gathering and EQT Transmission. The EQT Production segment includes its exploration for, and development and production of, natural gas, natural gas liquids and a limited amount of crude oil, primarily in the Appalachian Basin. The EQT Production segment also includes the marketing activities of the Company. EQT Production's properties are located in Pennsylvania, West Virginia, Kentucky and Virginia. The operations of EQT Gathering include the natural gas gathering activities of the Company, consisting solely of assets that are owned and operated by EQT Midstream Partners, LP (EQM). The operations of EQT Transmission include the natural gas transmission and storage activities of the Company, consisting solely of assets that are owned and operated by EQM. EQT Transmission focuses on various transmission projects, including Mountain Valley Pipeline and Transmission Expansion.

FINANCIAL RATIOS  of  EQT (EQT)

Valuation Ratios
P/E Ratio -21.2
Price to Sales 6
Price to Book 1.6
Price to Tangible Book
Price to Cash Flow 9
Price to Free Cash Flow -20.3
Growth Rates
Sales Growth Rate -31.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -37.2%
Cap. Spend. - 3 Yr. Gr. Rate -2.7%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 56.1%
Total Debt to Equity 56.1%
Interest Coverage -2
Management Effectiveness
Return On Assets -2.7%
Ret/ On Assets - 3 Yr. Avg. 1%
Return On Total Capital -5.2%
Ret/ On T. Cap. - 3 Yr. Avg. 0.4%
Return On Equity -8.3%
Return On Equity - 3 Yr. Avg. 0.8%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 42.2%
EBITDA Margin - 3 Yr. Avg. 54.6%
Operating Margin -17.4%
Oper. Margin - 3 Yr. Avg. 13.8%
Pre-Tax Margin -24.6%
Pre-Tax Margin - 3 Yr. Avg. 7.7%
Net Profit Margin -28.2%
Net Profit Margin - 3 Yr. Avg. -3%
Effective Tax Rate 66.8%
Eff/ Tax Rate - 3 Yr. Avg. 40.3%
Payout Ratio -4.4%

EQT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EQT stock intrinsic value calculation we used $3378 million for the last fiscal year's total revenue generated by EQT. The default revenue input number comes from 2017 income statement of EQT. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our EQT stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6%, whose default value for EQT is calculated based on our internal credit rating of EQT, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of EQT.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of EQT stock the variable cost ratio is equal to 31.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1410 million in the base year in the intrinsic value calculation for EQT stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for EQT.

Corporate tax rate of 27% is the nominal tax rate for EQT. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the EQT stock is equal to 2.8%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for EQT are equal to 603.6%.

Life of production assets of 10 years is the average useful life of capital assets used in EQT operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for EQT is equal to -19.4%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $13320 million for EQT - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 187 million for EQT is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of EQT at the current share price and the inputted number of shares is $10.4 billion.

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COMPANY NEWS

▶ EQT Declares Quarterly Cash Dividend   [Jul-11-18 04:15PM  Business Wire]
▶ Exclusive: 2 natural gas producers cut back in Marcellus   [Jun-26-18 12:24PM  American City Business Journals]
▶ Mountain Valley Pipeline still on schedule despite protests   [Jun-21-18 01:36PM  American City Business Journals]
▶ EQT on schedule to hire new CEO in 3Q   [11:21AM  American City Business Journals]
▶ EQT Midstream Partners Announces Pricing of Senior Notes   [Jun-20-18 05:22PM  Business Wire]
▶ Why EQT's real-time operations center is helping driller make gains   [May-23-18 02:02PM  American City Business Journals]
▶ Landowners fight pipeline in case headed to US appeals court   [May-09-18 12:54PM  Associated Press]
▶ Here's what EQT paid its top execs in 2017   [May-01-18 12:40PM  American City Business Journals]
▶ EQT Corporation (EQT) Jumps: Stock Rises 8.5%   [Apr-27-18 08:51AM  Zacks]
▶ EQT Midstream acquiring midstream assets worth more than $1.5B   [07:53AM  American City Business Journals]
▶ EQT: 1Q Earnings Snapshot   [06:43AM  Associated Press]
▶ EQT Reports First Quarter 2018 Results   [06:30AM  Business Wire]
▶ EQT Declares Quarterly Cash Dividend   [Apr-18-18 03:04PM  Business Wire]
▶ EQT outlines compensation for interim president and CEO   [Mar-21-18 05:16PM  American City Business Journals]
▶ Ex-CEO: Departure due to 'plain vanilla disagreement' with EQT board   [Mar-16-18 03:05PM  American City Business Journals]
▶ Schlotterbeck quits as EQT CEO   [Mar-15-18 03:15PM  American City Business Journals]
▶ EQT Announces Interim Leadership Change   [09:30AM  Business Wire]
▶ 2017 K-1 Tax Package Availability   [Mar-05-18 07:30AM  Business Wire]
▶ 3 Cheap Energy Stocks That Are Poised to Explode in 2018   [Feb-26-18 03:39PM  Insider Monkey]
▶ Stock Market News For Feb 22, 2018   [Feb-22-18 09:58AM  Zacks]
▶ EQT Breaks Up the Family -- Which Is Great   [Feb-21-18 12:40PM  Bloomberg]
▶ EQT to spin off midstream assets   [08:25AM  American City Business Journals]
▶ EQT beats Street 4Q forecasts   [07:03AM  Associated Press]
▶ Billionaire Investors are Bullish on These 6 Oil Stocks   [Feb-02-18 08:00AM  Insider Monkey]
▶ 4 Reasons the Stock Market's Outlook Is Bright: Goldman   [Jan-30-18 08:00AM  Investopedia]
▶ How Does EQT Corporation Benefit from the Rice Acquisition?   [Jan-26-18 10:33AM  Market Realist]
▶ EQT Corporations Hedge Position for 2018   [09:04AM  Market Realist]
▶ Expectations for EQTs Upcoming Earnings   [Jan-25-18 04:58PM  Market Realist]
▶ Short Interest Trends in Chesapeake Energy Stock   [Jan-24-18 09:02AM  Market Realist]
▶ EQT Declares Quarterly Cash Dividend   [Jan-17-18 04:20PM  Business Wire]
▶ Has Oil Become Overbought?   [Jan-16-18 03:00PM  Oilprice.com]
▶ Short Interest in Chesapeake Energy: Reading the Trends   [Jan-15-18 07:33AM  Market Realist]
▶ 3 Fast-Growing Dividend Stocks for 2018   [Jan-11-18 03:36PM  Motley Fool]
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