In the previous parts of this series, we compared EQT’s (EQT) EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple against its historical levels.
In this part, we’ll be looking at the company’s valuation compared to the multiples of its peers.
A peer group comparison shows that EQT’s forward EV-to-EBITDA multiple of ~13.5x is at a premium compared to its peer average of 12.9x. Noble Energy (NBL) is currently trading at a forward EV-to-EBITDA multiple of ~10.1x. Antero Resources (AR) is trading at a multiple of 11.7x. Cabot Oil & Gas (COG) is trading at a higher multiple of ~17x.
Together, these companies make up 8.6% of the iShares US Oil & Gas Exploration & Production ETF (IEO).
EQT’s valuation premium can be credited to its healthy credit position (read Parts 7 and 8) and lower risk.
EQT’s returns and dividends
Although its returns are negative, EQT offers slightly better returns when its profitability is scaled by its shareholder equity. This is called return on equity (or ROE). EQT’s ROE stands at about -1.6%. This negative ROE is the result of the company’s negative net earnings.
Among EQT’s peers, Antero Resources has the highest ROE of 9.5%.
In terms of more direct returns to shareholders, EQT offers a dividend yield of just ~0.15%. Among its peers, Noble Energy has the highest dividend yield at 1.7%.
Next, we’ll see what’s been driving EQT’s stock performance.