EQT (NYSE:EQT) is the country’s largest independent natural gas supplier focusing on production in the Marcellus Shale field of the Appalachian Basin, accounting for about 6% of U.S. natural gas output. This position has exposed the company to volatility in natural gas prices, leading its stock to drop over 18% from recent highs.
However, shares are rising about 2% in morning trading today, driven by natural gas futures surging nearly 20% to $3.70 per million British thermal units (Btus) on forecasts of an Arctic outbreak bringing frigid temperatures across the central and eastern U.S., boosting heating demand.
Weather happens, and reacting by jumping in and out of stocks based on temperature changes is not a sustainable investing strategy, but EQT remains a strong buy nonetheless due to its long-term growth potential.
Dominating Appalachian Gas Production
EQT operates as a vertically integrated natural gas company focused on exploration, production, and transportation in the Appalachian Basin, particularly the Marcellus and Utica shales. The company produces around 6 billion cubic feet equivalent of natural gas per day and holds about 19.8 trillion cubic feet equivalent of proved reserves across 1.8 million gross acres. It sells natural gas and liquids to utilities, marketers, and industrial users through its pipeline network, and has invested in low-emissions certified gas to attract data center operators concerned with environmental standards.
This business model has delivered solid results. In its most recent quarter, EQT reported earnings of $0.52 per share, handily exceeding estimates by $0.36, with adjusted operating revenue up 52% year-over-year to $1.98 billion. The company’s low debt load gives it its financial stability.
EQT also pays a quarterly dividend of $0.165 per share, yielding 1.3% annually, with a 10-year compound annual growth rate of 25% and a whopping 84% CAGR across five years. Even so, it has a free cash flow payout ratio of 57%, indicating both safety and room for additional dividend growth.
AI and Infrastructure Fuel the Fire
Over the past five years, EQT has enjoyed sustained earnings growth but is projected to see even better gains going forward with Wall Street forecasting 45% annually for the next five years, driven by its reserve base and infrastructure advantages. The company’s focus on certified low-emissions gas positions it well for emerging markets.
EQT’s outlook is supported by demand from AI data centers and grid enhancements. In a recent CNBC interview, CEO Toby Rice stated that AI will require about 100 gigawatts of power — equivalent to adding the electricity demand of 20 New York cities — noting, “We are still convicted that this is going to be a major source of energy demand in this country.”
Rice highlighted the need for 10 to 18 billion cubic feet per day of additional natural gas to meet this, building on the U.S. adding 14 billion cubic feet per day over the past 15 years, shifting from energy dependence to leadership in LNG exports.
He emphasized accelerating infrastructure to avoid delays, saying, “It’s time to wake up and get back to getting infrastructure built, which is going to be the key to meeting this demand.” He pointed to rising energy costs, with U.S. consumer bills up over 35% and PJM capacity auction prices nearly nine times historical levels. Rice called it an “alarm bell” signaling urgency.
This aligns with President Trump’s recent push for the PJM Interconnection — one of the largest electricity grid operators in the U.S. — to hold an emergency auction where tech companies bid on new generation capacity, aiming to keep prices low for consumers by letting market forces drive development.
Key Takeaway
EQT trades at attractive levels relative to its prospects. It goes for 17 times trailing earnings ratio and 12x next year’s estimates. Based on its earnings growth forecasts, it trades at just a fraction of that rate and at a discounted 12x the FCF it produces.
This natural gas giant should serve as a foundational holding in a diversified portfolio. While energy stocks face cyclical pressures from commodity prices, EQT is in a bullish phase driven by AI-driven demand and infrastructure expansions. Buying the stock at current valuations positions investors for significant returns as the company capitalizes on these trends.
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