National Fuel Gas Co (NYSE:NFG) reported fiscal second-quarter earnings on Thursday that missed analyst expectations, sending shares lower in after-hours trading as the company also trimmed its full-year guidance on weaker natural gas price assumptions.
The integrated energy company posted adjusted earnings per share of $2.71 for the quarter ended March 31, 2026, falling short of the consensus analyst estimate of $2.824. Revenue came in at $858.37 million versus the $859.99 million analysts had been modeling for.
Recent Performance
On a GAAP basis, National Fuel earned $2.59 per share, up from $2.37 in the same period last year. Net income rose to $247.7 million from $216.4 million a year earlier.
The primary driver of the year-over-year improvement came from the Integrated Upstream and Gathering segment, where adjusted earnings jumped 21% to $1.67 per share. That growth was fueled by a 17% increase in natural gas price realizations, which reached $3.45 per thousand cubic feet after accounting for hedging and transportation costs.
The Utility segment also contributed to the gains, with net income rising 3% to $65 million, supported by continued investment in system modernization programs in New York and Pennsylvania.
However, production came in slightly lower at 102.0 billion cubic feet (Bcf), down 3% from the prior year, primarily due to weather-related completion delays and the impact of Winter Storm Fern.
Guidance Outlook
Management revised its fiscal 2026 adjusted EPS guidance downward to a range of $7.45 to $7.75 per share, from the previous range of $7.60 to $8.10. The midpoint of $7.60 is below the current analyst consensus estimate of $8.07 for the full year.
The revision reflects a more cautious outlook on natural gas prices. National Fuel now assumes the NYMEX natural gas price will average $3.00 per million British thermal units (MMBtu) for the remaining six months of the fiscal year, down from the prior assumption of $3.75. The Appalachian basin spot price assumption was also reduced to $2.20 from $2.85.
Production guidance was lowered to 425-440 Bcf from the previous 440-455 Bcf range, reflecting the impacts of Winter Storm Fern and some underperformance at a six-well pad in Tioga County. The company stressed that these factors are not expected to affect its long-term production growth outlook, which remains in the mid-single digits over the next several years.
Capital expenditure guidance was left unchanged at $955 million to $1.065 billion, though management noted that higher oil and diesel prices related to the Iranian conflict and increased land activity could push spending toward the higher end of the range.
Segment Highlights
The Pipeline and Storage segment delivered GAAP earnings of $31.6 million, essentially flat year-over-year, as higher operating revenues were offset by increased depreciation expenses.
On the strategic front, the company announced that Supply Corporation entered into a precedent agreement to provide 94,000 dekatherms per day of incremental capacity in connection with its new Line N System Upgrade Project in southwest Pennsylvania, targeted for completion in late 2028.
Construction has also commenced on both the Tioga Pathway and Shippingport Lateral expansion projects, which remain on track for a late calendar year 2026 in-service date.
The Ohio gas utility acquisition from CenterPoint Energy remains on schedule for a fourth-quarter calendar 2026 close and is not expected to impact current fiscal year guidance.
Cash Flow and Balance Sheet
Net cash provided by operating activities reached $657 million through the first half of the fiscal year, generating free cash flow of $160 million—a $111 million improvement over the prior year. This strengthening cash flow profile supports the company's ability to fund its growth initiatives and return capital to shareholders.
Market Reaction
The stock declined more than 2% in after-hours trading following the earnings release, as the combination of an earnings miss and a reduced full-year outlook weighed on investor sentiment. The shares have fallen approximately 6.3% over the past month, suggesting the market had already been pricing in some headwinds heading into the report.
While the company delivered solid operational performance during a period of severe winter weather, the downward revision to both production and price assumptions for the remainder of the fiscal year appears to be the primary catalyst for the negative market reaction.
The broader context remains constructive, however. National Fuel continues to invest in expansion projects across its regulated pipeline and storage business, which should provide visible earnings growth in the coming years. The company's long-dated Appalachian inventory and improving capital efficiency at its upstream operations also position it to benefit when natural gas prices recover.
For more historical earnings data and future projections and estimates, view the full earnings history and analyst forecasts for National Fuel Gas Co at Chartmill's NFG earnings page and analyst ratings page.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Investors should conduct their own research and consult with a financial advisor before making investment decisions.