EQT Corp. (NYSE:EQT)

Return on Assets (ROA)

The ROA exhibited a consistent pattern of negative returns from the end of 2018 through the third quarter of 2022, indicating challenges in generating profitable returns from asset utilization. Initially, at the end of 2018, ROA was -10.83%, improving slightly to -2.3% by the second quarter of 2019, before declining again to more negative values towards the latter half of 2019 and early 2020, reaching lows near -12.56%. Throughout 2020 and 2021, ROA fluctuated but remained firmly negative, with a notable dip to -12.57% in the fourth quarter of 2021. However, by the third quarter of 2022, there was a significant reversal, with ROA turning positive to 8.25%, signaling a marked improvement in asset profitability.

Financial Leverage

Financial leverage demonstrated relative stability with a moderate range between approximately 1.82 and 2.79 over the observed period. Starting at 2.36 in the first quarter of 2018, it experienced a mild decline to 1.83 by the second quarter of 2019, suggesting a period of deleveraging or reduction in debt utilization. Following this, leverage increased steadily, peaking at 2.79 in the third quarter of 2021, before trending downward again to 2.34 as of the third quarter of 2022. The fluctuations suggest periodic adjustments in the capital structure, potentially reflecting strategic financing decisions or responses to changing business conditions.

Return on Equity (ROE)

ROE followed a pattern similar to ROA, consistently negative across most quarters, indicative of low profitability relative to shareholders' equity. At the end of 2018, ROE was -20.48%, improving briefly to -4.2% in the second quarter of 2019 before deteriorating substantially, reaching -24.96% in the fourth quarter of 2020. The negative trend deepened further into 2021, with a significant low of -35.08% in the last quarter. Nonetheless, the third quarter of 2022 saw a notable turnaround to a positive 19.34%, representing a strong recovery in equity returns likely linked to overall operational improvements and possibly the positive shift observed in ROA.

Summary of Trends

Both profitability metrics, ROA and ROE, experienced prolonged periods of negative performance, indicative of ongoing operational or market challenges through 2018 to early 2022. Financial leverage remained moderate with some variation but showed no extreme volatility. The positive reversal in ROA and ROE in the third quarter of 2022 suggests a significant improvement in financial performance, potentially reflecting effective management actions, improved market conditions, or both. This recovery is notable and may warrant further investigation into the drivers behind this positive change.

Net Profit Margin

The net profit margin exhibited a predominantly negative trajectory from the beginning of the observed period through to late 2021. Initially, it showed significant losses with the margin reaching as low as -82.92% at the end of 2020. The metric showed some recovery thereafter, but remained negative until it turned positive for the first time at 15.05% in the third quarter of 2022. This suggests a challenging profitability environment up until that recent improvement.

Asset Turnover

Asset turnover displayed a gradual but consistent upward trend over the period. Starting from approximately 0.23 in early 2019, the ratio declined slightly through 2020, reaching a low around 0.15. Post-2020, the ratio improved steadily, accelerating from 0.17 to 0.55 by the third quarter of 2022. This increase indicates improving efficiency in utilizing assets to generate revenue over time, especially notable in the last year of the data.

Financial Leverage

Financial leverage fluctuated moderately without a clear long-term directional trend. The ratio started near 2.36 in early 2018, decreased to about 1.83 in early 2019, and then oscillated generally between 1.9 and 2.3. Notable peaks were observed such as 2.79 in the third quarter of 2021, followed by decreases thereafter, ending near 2.34 in the most recent quarter. This indicates that the company's use of debt relative to equity remained somewhat stable but with periodic adjustments in leverage levels.

Return on Equity (ROE)

Return on equity mirrored the net profit margin's pattern, with persistently negative values throughout most of the period under review. It reached a nadir near -35.08% in the last quarter of 2021, reflecting substantial erosion of shareholder value during that period. Positive ROE was only recorded in the third quarter of 2022 at 19.34%, signifying a marked turnaround in the company's capacity to generate returns for its equity holders. The improvement in ROE aligns temporally with the positive shift in net profit margin, highlighting recovery in overall financial performance.

The analysis of the quarterly financial data reveals several notable trends and shifts over the periods covered.

Tax Burden and Interest Burden Ratios

Data for Tax Burden and Interest Burden ratios are limited, with values only reported for the last period at 0.76 and 0.9, respectively. These indicate the proportion of pre-tax income retained after taxes and interest expenses, but lack of historical data precludes trend analysis.

EBIT Margin

The EBIT margin exhibited significant volatility and consistently negative results throughout most quarterly periods, reflecting ongoing operational challenges. Starting from a low of -57.76% in late 2018, the margin fluctuated between negative levels, reaching its worst at -98.71% in late 2020. However, a marked improvement is observed by the latest period with a positive margin of 21.98%, indicating a turnaround in operational profitability.

Asset Turnover

Asset turnover demonstrated a generally increasing trend over time, starting from 0.23 in early 2019 and rising steadily to 0.55 in the most recent quarter. This suggests an improvement in the efficiency with which assets are generating revenue, nearly doubling the turnover ratio over the period.

Financial Leverage

The financial leverage ratio showed fluctuations throughout the quarters, beginning at 2.36 and dipping to around 1.82-1.85 in mid-2019 before increasing again to a peak of 2.79 in late 2021. The ratio slightly moderated towards the end of the period, ending at 2.34. This indicates a varying reliance on debt in the firm's capital structure, with phases of increased leveraging followed by some deleveraging.

Return on Equity (ROE)

ROE experienced significant negative values similar to the EBIT margin, reflecting periods of losses or very weak profitability. The ratio dropped to -35.08% in late 2021, representing the worst performance period. However, by the last reported quarter the ROE turned positive to 19.34%, consistent with the improvement in EBIT margin and suggesting enhanced shareholder value generation in the latest period.

Overall, the data indicate that the company faced considerable operational challenges leading to prolonged negative profitability through much of the observed timeline. Nonetheless, recent quarters demonstrate a notable recovery in margins, asset efficiency, and returns to equity holders, signaling a potential positive shift in financial performance and operational effectiveness.

Net Profit Margin

The net profit margin displays significant volatility and a general pattern of negative performance throughout most periods. Starting from a deep negative margin of -47.8% in December 2018, there is a trend of fluctuating losses with marginal improvements in certain quarters. Notably, the margin deteriorates sharply in 2020, reaching a low point of -82.92% in December 2020. From 2021 onwards, the losses persist but begin to moderate, culminating in a positive net margin of 15.05% in September 2022, indicating a possible turnaround in profitability.

Asset Turnover

The asset turnover ratio shows a gradual but steady increase over the periods considered. Initially stable around 0.23 in early 2019, it experiences a noticeable decline throughout 2019 and 2020 reaching a low of 0.15 in December 2020. Starting in 2021, the ratio shows a consistent upward trend, rising to 0.55 by September 2022. This suggests improved efficiency in asset utilization in generating revenue over time, especially in the later periods.

Return on Assets (ROA)

The return on assets follows a pattern generally aligned with net profit margin trends, marked by persistent negative returns across most periods. ROA starts at -10.83% in December 2018, worsening through 2020, with a lowest value of -12.56% in December 2020. Similar to the net profit margin, ROA shows gradual recovery beginning in 2021 but remains negative until mid-2022. The ratio ultimately turns positive at 8.25% by September 2022, reflecting improved overall profitability relative to asset base.

Overall Insights

The company exhibits challenging profitability conditions through the majority of the examined quarters, with especially harsh financial results during 2020. However, over the later periods, there are clear signs of operational improvements and financial recovery, as reflected in the rising net profit margin, asset turnover ratio, and return on assets culminating in positive profitability indicators by the third quarter of 2022. The increase in asset turnover suggests enhanced effectiveness in utilizing assets, which, combined with profitability recovery, may indicate successful strategic or market adjustments.

Tax Burden

The tax burden ratio is only available for the most recent data point, showing a value of 0.76, indicating that 24% of pre-tax earnings might be paid in taxes during that period.

Interest Burden

Similarly, the interest burden ratio is reported only at the latest date with a value of 0.9, suggesting interest expenses consumed around 10% of earnings before interest and taxes in that quarter.

EBIT Margin

The EBIT margin demonstrates a highly negative trend from early 2018 through late 2021, reflecting persistent operational losses. Initially, it was deeply negative at -57.76% in early 2018 and further declined to even more severe losses, reaching -98.71% by the end of 2020. Thereafter, some recovery is evidenced with margins improving to -7.1% in late 2022 and finally turning positive to 21.98% in the most recent quarter. This positive margin indicates a significant operational turnaround by the end of the analyzed period.

Asset Turnover

Asset turnover remained relatively stable but low throughout 2018 and 2019, hovering around 0.22 to 0.23. Starting in 2020, a declining trend took place, reaching a low of 0.15 by the end of 2020. From 2021 onwards, asset turnover began to improve steadily, rising from 0.17 in early 2021 to 0.55 by the last quarter reported. This upward trend suggests increased efficiency in using assets to generate sales over the most recent periods.

Return on Assets (ROA)

ROA was negative for the majority of the timeframe, reflecting losses and inefficiencies. The worst ROA values were observed between 2019 and 2021, with the ratio dropping as low as -12.57%. A gradual improvement began in late 2021 but remained negative until the final quarter. Notably, the last data point shows a positive ROA of 8.25%, aligning with the positive EBIT margin and indicating a return to profitability and improved asset utilization more recently.

Tax Burden

The tax burden ratio is provided only for the most recent period ending September 30, 2022, registering at 0.76. This single data point suggests the company retained 76% of its earnings after taxes during this quarter.

Interest Burden

Similarly, the interest burden ratio appears only for the last quarter recorded, June 30, 2022, with a value of 0.90. This implies that the company paid interest amounting to 10% of its earnings before interest and taxes in that period.

EBIT Margin

The EBIT margin demonstrates significant volatility over the periods from March 31, 2019, through September 30, 2022. Initial margins were deeply negative, starting at -57.76% in March 2019 and reaching nearly -99% by December 2020, indicating sustained operating losses. However, from March 2021 onwards, there is a gradual improvement with margins becoming less negative at times—for instance, -18.83% in March 2022 and -7.1% in September 2022—culminating in a positive EBIT margin of 21.98% in the latest quarter. This trend suggests a notable operational recovery over the latter part of the period analyzed.

Net Profit Margin

The net profit margin closely mirrors the EBIT margin in its pattern but shows consistent losses throughout most of the periods from March 2019 to September 2022. The margin starts at -47.8% and deteriorates to a low of -82.92% by December 2020. Following this, there is a partial recovery with the margin improving to -16.99% by March 2022 and reaching a positive 15.05% by September 2022. This positive shift towards profitability indicates enhanced overall financial performance including improvements in operating efficiency and possibly better cost management or revenue growth.