EQT Stock Is Near a Trough, Attracting Value Investors Ahead of Earnings

Natural gas producer EQT Corp (EQT) has had a rough 3 months, as analysts project significantly lower Q2 revenue. But EQT stock is at a 6-month low point, attracting value investors. Moreover, shorting one-month puts looks attractive.

EQT closed at $50.15 on Thursday, July 9, almost equal to its 6-month low price of $49.92 on Jan. 15, 2026. Has it dropped too far? Value investors think so.

Lower Expectations

For one, even though analysts are projecting significantly lower Q2 revenue in its upcoming July 21 earnings release, it should still be profitable.

For example, analysts project that this quarter will drop significantly. Last quarter, EQT generated revenue of $3.38 billion when oil and gas prices were at a peak. However, for Q2, analysts now project just $1.91 billion, according to Yahoo! Finance, and $1.87 billion, based on Seeking Alpha's survey.

If these numbers come in lower, expect EQT stock to tank, at least for a while. 

However, all is not lost. Analysts still project positive earnings per share (EPS), albeit nowhere near last quarter or even last year.

For example, Barchart's survey shows analysts project EPS of 48 cents for Q2. Yahoo! Finance shows 45 cents, and Seeking Alpha's survey is for just 42 cents, on a normalized basis. However, these are significantly lower than the Q1 EPS of $2.33.

Nevertheless, much of this decline is already reflected in EQT's depressed stock price.

Low EQT Stock Valuation

P/E Model. For example, for this year, analysts now project EPS between $4.40 (Barchart), $4.42 (Seeking Alpha), and $4.51 (Yahoo! Finance and Barchart). The average $4.44 EPS forecast $ is up from $3.05 last year.

But at $50.15 today, that means that EQT's price/earnings (P/E) ratio is just 11.3x. That is much lower than its historical average.

For example, Seeking Alpha shows that the 5-year forward P/E metric is over 19x. However, Morningstar shows that the 5-year forward P/E has been 11.98x. The average of these two is 15.5x.

That implies EQT could be worth $68.82 (i.e., $4.44 EPS x 15.5). That is +37% higher than yesterday's close.

Dividend Yield Model. Another way to value EQT is its historical dividend yield. For example, EQT's average yield has been 1.11% over the last 5 years, according to Morningstar, and 0.49% according to Yahoo! Finance. 

This means the average yield of 0.80% has been much lower than its present dividend yield of 1.356% (i.e., $0.68/$50.15). In fact, if EQT were to trade at its historical yield, it would be significantly higher:

  $0.68/0.0080 = $85.00 price target

That's 69.5% higher than today. Just to be conservative, using a 1.11% yield would give EQT a price target of $60.36. That still provides +20.35% potential upside if EQT were to trade at this historical yield. So, on average, it could be worth about $72.68, or +45% more.

The bottom line is that using a historical P/E model, EQT should be worth $68.82, and using a historical dividend yield, it's worth $72.68. On average, the price target is about $70.75, or over $20 higher (i.e., +41% upside).

However, there's no guarantee this will occur. One way value investors can play this is to sell short out-of-the-money (OTM) puts.

Shorting EQT Puts 

This play allows a value buyer to set a lower potential buy-in and also get paid while waiting.

For example, the August 7 expiry period (29 days from now) shows that the $48.00 put option strike price has a midpoint premium of 58 cents. That means a short-seller can make an immediate short-put yield of 1.208% (i.e., $0.58/$48.00).

Here is how this works. The investor secures $4,800 in cash and/or buying power with their brokerage firm. That acts as collateral to buy 100 shares (per put contract) at $48.00.

Then, after entering a trade order to “Sell to Open” 1 put at $48.00 for expiry on Aug. 7, the account will receive $58.00. Here is what that means:

  $58.00 / $4,800 = 1.208%

In other words, if the investor shorted 10 puts, the account would receive $580 after securing $48,000 with the brokerage firm.

Moreover, even if EQT drops after the earnings release, the investor's potential buy-in breakeven point is:

  $48.00 - $0.58 = $47.42

That's 7.3% below Thursday's close. So, it sets an attractive lower buy-in point for the value investor. Moreover, the delta ratio is just -0.2539, or just over a 25% likelihood that EQT will drop 4.29% in the next month to $48.00. 

The bottom line is that value investors believe EQT stock has significant upside, and shorting puts is an attractive way to play the stock.