EQT EQT Corporation
Low-cost integrated gas lever with LNG tailwinds — but the cycle is already in the price.
The story
EQT is the largest U.S. natural gas producer, vertically integrated after the Equitrans acquisition, with a genuine low-cost position in Appalachia. Its moat is cost leadership and midstream integration, not pricing power — it remains a price-taker on a cyclical commodity. TTM margins near 45% reflect a gas upcycle; LNG exports and data-center power demand are real structural tailwinds but largely anticipated by the market at ~$55.
Facts have not materially changed since my last take: TTM revenue of 9.48B and 44.7% margin confirm the upcycle but sit above my 42% sustainable target, which is already generous for a commodity producer and reflects EQT's low-cost/integrated structure. I keep all drivers — 5% near-term growth fading to 2% terminal (well below the 4.94% risk-free), beta 1.15 for gas-price sensitivity, and an 8-year horizon as this is a cyclical mature producer, not a franchise with a long reinvestment runway.
Value drivers
| Revenue growth (Y1) | 5.0% |
| Terminal growth | 2.0% |
| Forecast horizon | 8y |
| Target operating margin | 42.0% |
| Years to target margin | 5 |
| Sales-to-capital | 0.32 |
| Beta | 1.15 |
| Failure probability | 2.0% |
| Cost of capital (WACC) | 9.2% |
| Terminal WACC | 8.6% |
Valuation bridge
| PV of explicit FCFF | 13.82B |
| PV of terminal value | 25.25B |
| Equity value | 27.21B |
| ÷ shares → per share | $43.50 |
News
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Projected free cash flow to the firm
| Yr | Revenue | Growth | Margin | NOPAT | Reinvest | FCFF | PV |
|---|---|---|---|---|---|---|---|
| 1 | 9.95B | 5.0% | 44.1% | 3.43B | 1.48B | 1.95B | 1.79B |
| 2 | 10.41B | 4.6% | 43.6% | 3.54B | 1.42B | 2.12B | 1.78B |
| 3 | 10.84B | 4.1% | 43.1% | 3.65B | 1.35B | 2.30B | 1.77B |
| 4 | 11.24B | 3.7% | 42.5% | 3.73B | 1.26B | 2.48B | 1.74B |
| 5 | 11.61B | 3.3% | 42.0% | 3.81B | 1.15B | 2.65B | 1.71B |
| 6 | 11.94B | 2.9% | 42.0% | 3.92B | 1.04B | 2.88B | 1.70B |
| 7 | 12.23B | 2.4% | 42.0% | 4.01B | 906.38M | 3.11B | 1.68B |
| 8 | 12.48B | 2.0% | 42.0% | 4.09B | 764.55M | 3.33B | 1.65B |
Key risks
- Natural gas price mean-reversion compresses the 45% cyclical margin toward cycle-average economics
- 7.7B net debt from the Equitrans deal limits flexibility if gas prices fall
- Appalachian takeaway constraints and permitting/political risk (e.g., pipeline opposition) cap volume growth
- LNG export ramp delays or data-center demand disappointments deflate the demand narrative
Catalysts
- New LNG export capacity ramping 2025-2026 tightens the gas market and supports realized prices
- Data-center and power-generation gas demand contracts provide volume visibility
- Deleveraging toward mid-cycle net debt targets could drive re-rating as integration synergies land