Intrinsic value of EQT - EQT

Previous Close

$63.35

  Intrinsic Value

$8.48

stock screener

  Rating & Target

str. sell

-87%

  Value-price divergence*

-61%

Previous close

$63.35

 
Intrinsic value

$8.48

 
Up/down potential

-87%

 
Rating

str. sell

 
Value-price divergence*

-61%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

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 2016), $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 10.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -31.28
  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
  1,857
  2,573
  3,975
  5,945
  8,625
  12,169
  16,730
  22,456
  29,486
  37,942
  47,923
  59,510
  72,756
  87,696
  104,341
  122,686
  142,714
  164,394
  187,693
  212,572
  238,994
  266,925
  296,334
  327,201
  359,511
  393,259
  428,450
  465,098
  503,227
  542,874
  584,081
Variable operating expenses, $m
 
  1,953
  3,017
  4,512
  6,547
  9,236
  12,698
  17,044
  22,380
  28,798
  36,374
  45,168
  55,222
  66,561
  79,195
  93,119
  108,320
  124,775
  142,459
  161,342
  181,396
  202,596
  224,918
  248,346
  272,869
  298,484
  325,193
  353,009
  381,950
  412,041
  443,317
Fixed operating expenses, $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 operating expenses, $m
  1,887
  1,953
  3,017
  4,512
  6,547
  9,236
  12,698
  17,044
  22,380
  28,798
  36,374
  45,168
  55,222
  66,561
  79,195
  93,119
  108,320
  124,775
  142,459
  161,342
  181,396
  202,596
  224,918
  248,346
  272,869
  298,484
  325,193
  353,009
  381,950
  412,041
  443,317
Operating income, $m
  -278
  620
  958
  1,433
  2,079
  2,933
  4,032
  5,412
  7,106
  9,144
  11,550
  14,342
  17,534
  21,135
  25,146
  29,567
  34,394
  39,619
  45,234
  51,230
  57,598
  64,329
  71,417
  78,856
  86,642
  94,775
  103,256
  112,088
  121,278
  130,833
  140,763
EBITDA, $m
  650
  2,102
  3,247
  4,856
  7,046
  9,941
  13,667
  18,345
  24,088
  30,996
  39,150
  48,616
  59,438
  71,642
  85,240
  100,227
  116,589
  134,300
  153,334
  173,659
  195,244
  218,061
  242,087
  267,304
  293,699
  321,269
  350,018
  379,957
  411,106
  443,495
  477,159
Interest expense (income), $m
  145
  148
  409
  787
  1,318
  2,041
  2,996
  4,226
  5,770
  7,665
  9,945
  12,636
  15,760
  19,331
  23,359
  27,846
  32,792
  38,192
  44,037
  50,318
  57,026
  64,149
  71,680
  79,609
  87,931
  96,642
  105,740
  115,228
  125,108
  135,388
  146,077
Earnings before tax, $m
  -395
  472
  549
  646
  761
  892
  1,036
  1,186
  1,336
  1,479
  1,605
  1,706
  1,775
  1,804
  1,787
  1,721
  1,602
  1,427
  1,197
  911
  572
  179
  -263
  -753
  -1,288
  -1,866
  -2,484
  -3,139
  -3,830
  -4,556
  -5,314
Tax expense, $m
  -264
  127
  148
  174
  205
  241
  280
  320
  361
  399
  433
  461
  479
  487
  483
  465
  432
  385
  323
  246
  154
  48
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -453
  345
  401
  471
  555
  651
  756
  866
  976
  1,080
  1,172
  1,245
  1,296
  1,317
  1,305
  1,256
  1,169
  1,042
  874
  665
  417
  131
  -263
  -753
  -1,288
  -1,866
  -2,484
  -3,139
  -3,830
  -4,556
  -5,314

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,390
  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
  15,473
  22,568
  34,868
  52,145
  75,660
  106,746
  146,751
  196,983
  258,651
  332,821
  420,379
  522,016
  638,214
  769,263
  915,271
  1,076,196
  1,251,875
  1,442,055
  1,646,429
  1,864,667
  2,096,439
  2,341,444
  2,599,425
  2,870,187
  3,153,607
  3,449,641
  3,758,330
  4,079,803
  4,414,274
  4,762,049
  5,123,516
Adjusted assets (=assets-cash), $m
  14,083
  22,568
  34,868
  52,145
  75,660
  106,746
  146,751
  196,983
  258,651
  332,821
  420,379
  522,016
  638,214
  769,263
  915,271
  1,076,196
  1,251,875
  1,442,055
  1,646,429
  1,864,667
  2,096,439
  2,341,444
  2,599,425
  2,870,187
  3,153,607
  3,449,641
  3,758,330
  4,079,803
  4,414,274
  4,762,049
  5,123,516
Revenue / Adjusted assets
  0.132
  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
  12,317
  19,708
  30,448
  45,535
  66,070
  93,215
  128,149
  172,013
  225,864
  290,632
  367,092
  455,845
  557,314
  671,751
  799,251
  939,778
  1,093,187
  1,259,260
  1,437,728
  1,628,301
  1,830,694
  2,044,642
  2,269,922
  2,506,362
  2,753,856
  3,012,365
  3,281,924
  3,562,647
  3,854,721
  4,158,412
  4,474,059
Working capital, $m
  1,023
  -587
  -906
  -1,355
  -1,967
  -2,775
  -3,814
  -5,120
  -6,723
  -8,651
  -10,927
  -13,568
  -16,588
  -19,995
  -23,790
  -27,972
  -32,539
  -37,482
  -42,794
  -48,466
  -54,491
  -60,859
  -67,564
  -74,602
  -81,969
  -89,663
  -97,687
  -106,042
  -114,736
  -123,775
  -133,170
Total debt, $m
  3,289
  9,090
  17,491
  29,291
  45,352
  66,583
  93,907
  128,215
  170,334
  220,992
  280,795
  350,213
  429,576
  519,083
  618,806
  728,718
  848,706
  978,599
  1,118,187
  1,267,243
  1,425,544
  1,592,882
  1,769,083
  1,954,014
  2,147,590
  2,349,781
  2,560,616
  2,780,181
  3,008,625
  3,246,156
  3,493,037
Total liabilities, $m
  9,613
  15,414
  23,815
  35,615
  51,676
  72,907
  100,231
  134,539
  176,658
  227,316
  287,119
  356,537
  435,900
  525,407
  625,130
  735,042
  855,030
  984,923
  1,124,511
  1,273,567
  1,431,868
  1,599,206
  1,775,407
  1,960,338
  2,153,914
  2,356,105
  2,566,940
  2,786,505
  3,014,949
  3,252,480
  3,499,361
Total equity, $m
  5,860
  7,154
  11,053
  16,530
  23,984
  33,838
  46,520
  62,443
  81,992
  105,504
  133,260
  165,479
  202,314
  243,856
  290,141
  341,154
  396,844
  457,131
  521,918
  591,099
  664,571
  742,238
  824,018
  909,849
  999,694
  1,093,536
  1,191,391
  1,293,297
  1,399,325
  1,509,570
  1,624,155
Total liabilities and equity, $m
  15,473
  22,568
  34,868
  52,145
  75,660
  106,745
  146,751
  196,982
  258,650
  332,820
  420,379
  522,016
  638,214
  769,263
  915,271
  1,076,196
  1,251,874
  1,442,054
  1,646,429
  1,864,666
  2,096,439
  2,341,444
  2,599,425
  2,870,187
  3,153,608
  3,449,641
  3,758,331
  4,079,802
  4,414,274
  4,762,050
  5,123,516
Debt-to-equity ratio
  0.561
  1.270
  1.580
  1.770
  1.890
  1.970
  2.020
  2.050
  2.080
  2.090
  2.110
  2.120
  2.120
  2.130
  2.130
  2.140
  2.140
  2.140
  2.140
  2.140
  2.150
  2.150
  2.150
  2.150
  2.150
  2.150
  2.150
  2.150
  2.150
  2.150
  2.150
Adjusted equity ratio
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -453
  345
  401
  471
  555
  651
  756
  866
  976
  1,080
  1,172
  1,245
  1,296
  1,317
  1,305
  1,256
  1,169
  1,042
  874
  665
  417
  131
  -263
  -753
  -1,288
  -1,866
  -2,484
  -3,139
  -3,830
  -4,556
  -5,314
Depreciation, amort., depletion, $m
  928
  1,482
  2,289
  3,424
  4,968
  7,009
  9,635
  12,933
  16,982
  21,852
  27,601
  34,274
  41,903
  50,508
  60,094
  70,660
  82,195
  94,681
  108,100
  122,429
  137,646
  153,733
  170,671
  188,448
  207,057
  226,494
  246,761
  267,868
  289,829
  312,663
  336,395
Funds from operations, $m
  891
  1,826
  2,690
  3,895
  5,523
  7,660
  10,391
  13,799
  17,958
  22,932
  28,772
  35,520
  43,199
  51,824
  61,399
  71,916
  83,364
  95,723
  108,974
  123,094
  138,063
  153,863
  170,408
  187,695
  205,768
  224,627
  244,277
  264,729
  285,998
  308,107
  331,082
Change in working capital, $m
  -173
  -220
  -320
  -449
  -611
  -808
  -1,040
  -1,306
  -1,603
  -1,928
  -2,276
  -2,642
  -3,020
  -3,406
  -3,795
  -4,183
  -4,566
  -4,943
  -5,312
  -5,672
  -6,024
  -6,368
  -6,705
  -7,038
  -7,367
  -7,695
  -8,023
  -8,356
  -8,694
  -9,039
  -9,395
Cash from operations, $m
  1,064
  2,046
  3,010
  4,344
  6,134
  8,468
  11,431
  15,105
  19,561
  24,859
  31,048
  38,161
  46,219
  55,231
  65,194
  76,099
  87,930
  100,666
  114,286
  128,766
  144,088
  160,232
  177,113
  194,733
  213,135
  232,322
  252,301
  273,085
  294,692
  317,146
  340,477
Maintenance CAPEX, $m
  0
  -926
  -1,482
  -2,289
  -3,424
  -4,968
  -7,009
  -9,635
  -12,933
  -16,982
  -21,852
  -27,601
  -34,274
  -41,903
  -50,508
  -60,094
  -70,660
  -82,195
  -94,681
  -108,100
  -122,429
  -137,646
  -153,733
  -170,671
  -188,448
  -207,057
  -226,494
  -246,761
  -267,868
  -289,829
  -312,663
New CAPEX, $m
  -1,539
  -7,391
  -10,741
  -15,087
  -20,534
  -27,145
  -34,934
  -43,864
  -53,851
  -64,768
  -76,460
  -88,753
  -101,469
  -114,437
  -127,500
  -140,526
  -153,409
  -166,073
  -178,468
  -190,574
  -202,393
  -213,948
  -225,280
  -236,441
  -247,494
  -258,509
  -269,560
  -280,723
  -292,074
  -303,691
  -315,647
Cash from investing activities, $m
  -2,961
  -8,317
  -12,223
  -17,376
  -23,958
  -32,113
  -41,943
  -53,499
  -66,784
  -81,750
  -98,312
  -116,354
  -135,743
  -156,340
  -178,008
  -200,620
  -224,069
  -248,268
  -273,149
  -298,674
  -324,822
  -351,594
  -379,013
  -407,112
  -435,942
  -465,566
  -496,054
  -527,484
  -559,942
  -593,520
  -628,310
Free cash flow, $m
  -1,897
  -6,270
  -9,213
  -13,032
  -17,824
  -23,645
  -30,512
  -38,395
  -47,224
  -56,891
  -67,264
  -78,193
  -89,524
  -101,110
  -112,814
  -124,521
  -136,139
  -147,601
  -158,863
  -169,907
  -180,734
  -191,363
  -201,899
  -212,379
  -222,807
  -233,244
  -243,752
  -254,399
  -265,251
  -276,373
  -287,833
Issuance/(repayment) of debt, $m
  -304
  5,801
  8,401
  11,800
  16,061
  21,231
  27,323
  34,308
  42,119
  50,658
  59,803
  69,418
  79,364
  89,506
  99,724
  109,912
  119,988
  129,893
  139,588
  149,056
  158,300
  167,338
  176,201
  184,931
  193,576
  202,191
  210,835
  219,566
  228,444
  237,530
  246,882
Issuance/(repurchase) of shares, $m
  1,943
  2,340
  3,498
  5,006
  6,899
  9,203
  11,926
  15,058
  18,573
  22,432
  26,585
  30,973
  35,539
  40,226
  44,980
  49,757
  54,521
  59,245
  63,913
  68,516
  73,055
  77,536
  82,043
  86,585
  91,133
  95,709
  100,338
  105,046
  109,858
  114,800
  119,898
Cash from financing (excl. dividends), $m  
  1,419
  8,141
  11,899
  16,806
  22,960
  30,434
  39,249
  49,366
  60,692
  73,090
  86,388
  100,391
  114,903
  129,732
  144,704
  159,669
  174,509
  189,138
  203,501
  217,572
  231,355
  244,874
  258,244
  271,516
  284,709
  297,900
  311,173
  324,612
  338,302
  352,330
  366,780
Total cash flow (excl. dividends), $m
  -478
  1,870
  2,686
  3,773
  5,136
  6,789
  8,737
  10,971
  13,469
  16,199
  19,124
  22,198
  25,379
  28,622
  31,890
  35,148
  38,370
  41,537
  44,637
  47,665
  50,621
  53,511
  56,345
  59,137
  61,902
  64,657
  67,421
  70,213
  73,052
  75,957
  78,948
Retained Cash Flow (-), $m
  -782
  -2,684
  -3,899
  -5,477
  -7,454
  -9,854
  -12,682
  -15,923
  -19,549
  -23,512
  -27,756
  -32,219
  -36,835
  -41,542
  -46,285
  -51,013
  -55,690
  -60,287
  -64,787
  -69,181
  -73,472
  -77,667
  -82,043
  -86,585
  -91,133
  -95,709
  -100,338
  -105,046
  -109,858
  -114,800
  -119,898
Prev. year cash balance distribution, $m
 
  1,390
  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
 
  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 available for distribution, $m
 
  576
  -1,213
  -1,703
  -2,318
  -3,065
  -3,944
  -4,952
  -6,080
  -7,312
  -8,633
  -10,020
  -11,456
  -12,920
  -14,395
  -15,866
  -17,320
  -18,750
  -20,149
  -21,516
  -22,851
  -24,155
  -25,698
  -27,448
  -29,231
  -31,052
  -32,918
  -34,833
  -36,806
  -38,843
  -40,951
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  552
  -1,110
  -1,482
  -1,909
  -2,376
  -2,862
  -3,346
  -3,800
  -4,201
  -4,526
  -4,759
  -4,889
  -4,912
  -4,833
  -4,658
  -4,401
  -4,080
  -3,711
  -3,313
  -2,904
  -2,498
  -2,132
  -1,799
  -1,489
  -1,208
  -960
  -748
  -569
  -424
  -308
Current shareholders' claim on cash, %
  100
  78.1
  61.9
  49.8
  40.7
  33.8
  28.4
  24.2
  20.9
  18.2
  16.1
  14.3
  12.8
  11.6
  10.5
  9.7
  8.9
  8.2
  7.7
  7.2
  6.7
  6.3
  6.0
  5.6
  5.4
  5.1
  4.9
  4.6
  4.4
  4.3
  4.1

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 -24.2
Price to Sales 6.8
Price to Book 1.9
Price to Tangible Book
Price to Cash Flow 10.3
Price to Free Cash Flow -23.1
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 $1608 million for the last fiscal year's total revenue generated by EQT. The default revenue input number comes from 2016 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 4.3%, 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 75.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 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 4.5% 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 0%.

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 766%.

Life of production assets of 13.3 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 -22.8%. 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 - $5860 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 172.781 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 $10.9 billion.

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RICE Rice Energy 28.12 2.38  str.sell
RRC Range Resource 18.86 3.88  str.sell
KMI Kinder Morgan 18.42 5.74  str.sell
CPK Chesapeake Uti 81.15 133.67  str.buy

COMPANY NEWS

▶ Where Natural Gas Prices Stand next to Oil Prices   [Oct-19-17 11:57AM  Market Realist]
▶ Noble Energys 3Q17 Earnings: What to Expect   [10:59AM  Market Realist]
▶ EQT Corp. Value Analysis (NYSE:EQT) : October 18, 2017   [Oct-18-17 10:12AM  Capital Cube]
▶ Are Natural GasWeighted Stocks Underperforming Natural Gas?   [Oct-17-17 08:56AM  Market Realist]
▶ EQTs Implied Volatility Trends: What We Can Expect   [Oct-13-17 10:37AM  Market Realist]
▶ Key Updates on the EQT-RICE Merger   [07:41AM  Market Realist]
▶ Whats Been Driving EQT Stock?   [Oct-12-17 05:35PM  Market Realist]
▶ EQT Declares Quarterly Cash Dividend   [Oct-11-17 04:29PM  Business Wire]
▶ Is Oil Swaying Natural-Gas-Weighted Stocks?   [Oct-03-17 02:52PM  Market Realist]
▶ Will MLPs Retain Tax Favored Status?   [Oct-02-17 08:53PM  Barrons.com]
▶ EQT Corporation Announces Pricing of Senior Notes   [Sep-27-17 06:00PM  Business Wire]
▶ Natural GasWeighted Stocks Ignore Gass Weakness   [Sep-26-17 03:06PM  Market Realist]
▶ Where Most 2017 Energy M&A Deals Took Place   [Sep-25-17 10:06AM  Market Realist]
▶ Upstream Energy Losers This Week: COG, AR, and EQT   [Sep-21-17 02:07PM  Market Realist]
▶ Natural GasWeighted Stocks That Are Correlated with Oil   [Sep-19-17 05:09PM  Market Realist]
▶ Cabot Oil & Gass Stock Price Range: Whats the Forecast?   [Sep-15-17 12:29PM  Market Realist]
▶ EQT said it'll make decision on valuation strategy by early '18   [11:00AM  American City Business Journals]
▶ EQT Accelerates Plan to Address Sum-of-the-Parts Discount   [Sep-13-17 11:42PM  Business Wire]
▶ The Struggling Natural Gas Sector and Gas-Weighted Stocks   [Sep-12-17 05:36PM  Market Realist]
▶ Understanding Short Interest Trends in Chesapeake Stock   [Sep-08-17 11:05AM  Market Realist]
▶ What Are the Trends in EQTs Implied Volatility?   [Sep-06-17 09:05AM  Market Realist]
▶ Analysts Recommendations for EQT   [07:36AM  Market Realist]
▶ Chart of the Week: RICE Acquisition Impacts EQT   [Sep-05-17 03:37PM  Market Realist]
▶ What Are the Trends in EQTs Proved Reserves?   [09:06AM  Market Realist]
▶ What Is EQTs 2017 Hedge Position?   [07:36AM  Market Realist]
▶ Whats EQTs Production Outlook for This Year?   [Sep-04-17 10:36AM  Market Realist]
▶ The Latest Update on the EQTRice Energy Deal   [04:36PM  Market Realist]
▶ Gas-Weighted Stocks Could Yield More than Natural Gas Prices   [Aug-30-17 01:06PM  Market Realist]
▶ EQT Corp. Value Analysis (NYSE:EQT) : August 29, 2017   [Aug-28-17 08:30PM  Capital Cube]
▶ Do Gas-Weighted Stocks Returns Match Natural Gass Gains?   [Aug-23-17 09:08AM  Market Realist]
▶ US Natural Gas Futures Could Fall in 3Q17   [Aug-18-17 10:53AM  Market Realist]
▶ Inventories Spread: Natural Gas Prices Could Make a U-Turn   [Aug-17-17 03:05PM  Market Realist]
▶ Will US Natural Gas Futures Fall from Current Levels?   [Aug-15-17 10:36AM  Market Realist]
▶ EQT defends Rice deal after new letter from activist investor   [Aug-14-17 03:25PM  American City Business Journals]
▶ ETFs with exposure to EQT Corp. : August 11, 2017   [Aug-11-17 05:24PM  Capital Cube]
▶ Are Natural GasWeighted Stocks More Aligned with Oil Prices?   [Aug-09-17 03:35PM  Market Realist]
▶ Noble Energy Reported an Earnings Beat, Revenues in Line   [Aug-08-17 10:36AM  Market Realist]
Financial statements of EQT
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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