EQT Corp. (NYSE:EQT)

The financial data over the period from the end of 2017 to the end of 2021 reveals several notable trends in profitability, cost of capital, invested capital, and economic profit.

Net Operating Profit After Taxes (NOPAT)

NOPAT showed a positive value in 2017 but experienced a significant decline in 2018, resulting in a large negative figure. This negative trend continued through 2019, 2020, and 2021. Although there were some fluctuations within these years, the company consistently reported negative NOPAT from 2018 onward, indicating challenges in generating operating profitability after tax deductions during this period.

Cost of Capital

The cost of capital decreased from 12.85% in 2017 to 5.83% in 2019, representing a more favorable capital cost environment. However, it increased again in 2020 and 2021 to approximately 10.4% and 11.0%, respectively. This fluctuation suggests varying market or risk perceptions affecting the company’s capital expenses over the years.

Invested Capital

Invested capital demonstrated a downward trend from about $26.5 billion in 2017 to approximately $16.5 billion in 2021. This steady reduction may indicate asset divestitures, capital expenditure management, or restructuring efforts to optimize capital deployment.

Economic Profit

Economic profit was negative throughout the entire period, beginning with a loss of roughly $3.0 billion in 2017, worsening markedly in 2018, then slightly improving in 2019 before declining again in 2020 and 2021. The persistent negative economic profit indicates that the company’s returns did not cover its cost of capital, which reflects insufficient value creation for shareholders over these years.

In summary, the company experienced a deterioration in operational profitability coupled with a consistently negative economic profit, despite a decrease in invested capital. The fluctuating cost of capital suggests changing market conditions or risk profiles, but overall, the financial metrics point to challenges in achieving value generation during the analyzed timeframe.

Net Income (Loss) Attributable to EQT Corporation

Over the five-year period from 2017 to 2021, net income exhibited a significant downward trend. In 2017, net income was positive, amounting to approximately $1.51 billion. However, from 2018 onwards, the company incurred losses each year, with the loss magnitude increasing initially in 2018 (around $2.24 billion), followed by a somewhat reduced loss of roughly $1.22 billion in 2019. The losses remained substantial in 2020 and 2021, with figures close to $967 million and $1.16 billion respectively. This pattern suggests persistent financial challenges beginning in 2018 and continuing through 2021, without a return to profitability within this timeframe.

Net Operating Profit After Taxes (NOPAT)

The NOPAT data reveals a similar trajectory to net income, indicating consistent operating losses from 2018 forward. Starting with a positive NOPAT of about $408 million in 2017, the company faced a steep decline to a negative $2.33 billion in 2018. Subsequent years show ongoing negative NOPAT values, though somewhat less severe than 2018, with losses of approximately $1.34 billion, $908 million, and $1.35 billion in 2019, 2020, and 2021 respectively. The continuous negative NOPAT reflects challenges in the core operations, implying difficulties in generating operating profitability post-2017.

Overall Trend Analysis

The data indicates a critical inflection point between 2017 and 2018, with both net income and operating profit shifting sharply from profitability to significant losses. This negative trend persists without material improvement through to 2021. Despite some fluctuations in the magnitude of losses, the absence of recovery highlights ongoing adverse conditions impacting the company's earnings and operational efficiency over this interval.

The financial data reflects fluctuations and notable trends in the tax-related components over the five-year period ending December 31, 2021.

Income Tax Benefit

This item shows a consistent decrease in the magnitude of the tax benefit from 2017 through 2020, moving from approximately -1,188,416 thousand US dollars in 2017 to -298,858 thousand US dollars in 2020. The decreasing absolute value suggests a diminishing tax benefit over time. However, in 2021, there is a slight reversal with the income tax benefit increasing in magnitude to -434,175 thousand US dollars, indicating a partial rebound in the tax benefits recognized.

Cash Operating Taxes

Cash operating taxes exhibit significant volatility during the period. Notably, there is a sharp increase in the cash operating tax outflow in 2018, with a value of -510,482 thousand US dollars, which markedly exceeds the amounts of the surrounding years. In 2019 and 2020, these operating taxes decreased substantially to -58,336 and -85,720 thousand US dollars respectively. Contrasting with previous years, a positive figure of 64,624 thousand US dollars is observed in 2021, indicating a cash inflow or a tax refund rather than an outflow, which marks a substantial positive shift in this cash flow item.

Overall, the data reveals a general trend of decreasing income tax benefits until 2020 followed by a slight increase in 2021, alongside a volatile pattern in cash operating taxes which includes a significant outflow anomaly in 2018 and a notable positive inflow in 2021. These trends suggest shifts in the tax strategy, tax payments, or recognition of tax benefits, as well as possible changes in underlying tax positions or operational tax circumstances during the analyzed period.

Total reported debt & leases

Over the five-year period, total reported debt and leases exhibited a general downward trend from 6,193,259 thousand USD at the end of 2017 to a low of 4,975,379 thousand USD at the end of 2020. However, this was followed by an increase to 5,537,714 thousand USD at the end of 2021, indicating a partial reversal of the previous declining trend.

Common shareholders’ equity

The common shareholders' equity showed a consistent decline from 13,319,618 thousand USD in 2017 to a low of 9,255,240 thousand USD in 2020. Notably, in 2021 there was a recovery to 10,029,527 thousand USD, suggesting improvement in equity position after several years of decrease.

Invested capital

Invested capital experienced a sharp decline from 26,508,072 thousand USD in 2017 to 15,621,670 thousand USD in 2020. This represents a significant reduction in invested capital over these years. In 2021, there was a modest increase to 16,527,021 thousand USD, signaling a stabilization or slight growth after the downward trajectory.

The financial indicators for the company reveal a consistent trend of negative economic profit throughout the examined period, spanning from 2017 to 2021. Economic profit values remain substantially below zero, indicating that the returns generated by the company do not exceed its cost of capital during these years.

Invested capital exhibits a notable decline from 2017 through 2020, with a decrease from approximately 26.5 billion US dollars to about 15.6 billion US dollars. However, in 2021, invested capital shows a slight increase, rising to 16.5 billion US dollars. This pattern suggests a reduction in capital employed over most of the period, followed by a modest recovery in the final year.

The economic spread ratio, a measure reflecting the difference between the return on invested capital and the cost of capital, remains consistently negative. It deteriorates markedly in 2018, reaching -22.62%, which is the lowest point in the analyzed timeline. Subsequent years demonstrate partial improvement but still reflect negative spreads, with values of -13.87% in 2019, declining again to -16.23% in 2020 and -19.13% in 2021. These figures underscore persistent challenges in generating returns exceeding capital costs.

Economic Profit

Remains negative throughout, indicating economic losses each year with no positive returns above cost of capital.

Invested Capital

Declines sharply from 2017 to 2020, implying possible divestment or asset reduction, then slightly increases in 2021, suggesting renewed investment or capital reallocation.

Economic Spread Ratio

Consistently negative, with the worst performance in 2018 and slight recoveries thereafter, but never reaching positive territory. This suggests ongoing value destruction on invested capital.

In summary, the data indicates that the company has struggled to generate positive economic returns over the five-year period, continuously experiencing value erosion with invested capital contracting and persistently negative economic spreads. The modest rise in invested capital during 2021 does not coincide with an improvement in economic profit or spread, implying that increased investment has yet to translate into value creation.

Economic Profit

The economic profit showed negative values throughout the analyzed period, indicating persistent economic losses. There was a sharp decline from 2017 to 2018, with economic losses increasing from approximately -2.997 billion US dollars to over -4.161 billion US dollars. This negative trend partially reversed in 2019, with losses decreasing to about -2.310 billion US dollars. However, economic losses rose again in 2020 to around -2.535 billion US dollars, before further increasing to approximately -3.161 billion US dollars in 2021. Overall, the data exhibits significant fluctuations but consistently reflects an inability to generate positive economic profit.

Sales of Natural Gas, Natural Gas Liquids, and Oil

Sales exhibited considerable volatility over the five-year period. There was a notable increase from 2.651 billion US dollars in 2017 to a peak of approximately 4.696 billion US dollars in 2018. However, sales declined to 3.791 billion US dollars in 2019 and further dropped to around 2.650 billion US dollars in 2020. In 2021, sales surged dramatically to 6.804 billion US dollars, representing the highest sales figure during the timeframe. This sharp increase in 2021 may reflect market recovery or changes in commodity prices or production volumes.

Economic Profit Margin

The economic profit margin consistently remained negative throughout the period, mirroring the trends observed in economic profit. The margin improved somewhat from -113.06% in 2017 to -88.62% in 2018, indicating reduced losses relative to sales. This positive movement continued into 2019, with a margin of -60.92%, signaling an improving financial efficiency. However, the margin deteriorated again in 2020, falling to -95.69%, before improving markedly to -46.46% in 2021. Despite these fluctuations, the margin remained below zero, highlighting ongoing challenges in achieving profitability relative to sales.