As of July 18, 2023, APA Corp (APA, Financial) has seen a significant price change of 4.27%, bringing its stock price to $37.88. This Houston-based independent exploration and production company, with operations primarily in the U.S., Egypt, the North Sea, and Suriname, reported an EPS of $6.15 and a market cap of $11.7 billion. Its sales for the year stand at $10.4 billion. The GF Value, a unique indicator of a stock's intrinsic worth, places APA at $41.27, suggesting that it is fairly valued.
APA (APA, Financial) has a rich history in the Oil & Gas industry, boasting proved reserves of 890 million barrels of oil equivalent at the end of 2022. Its net reported production for that year was 400 thousand boe/d, with 64% consisting of oil and natural gas liquids, and the remainder being natural gas.
Understanding APA's GF Value
The GF Value of APA Corp (APA, Financial) is calculated based on historical trading multiples, an adjustment factor from GuruFocus based on past performance and growth, and estimates of future business performance. The GF Value Line represents the fair value at which the stock should ideally be traded. If the stock price significantly surpasses the GF Value Line, the stock may be overvalued. Conversely, if the stock price is significantly below the GF Value, it may be undervalued. At its current price of $37.88 per share, APA's stock is considered fairly valued.
Since APA is fairly valued, the long-term return of its stock is likely to align with the rate of its business growth.
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APA's Financial Strength
Companies with poor financial strength pose a high risk of permanent capital loss. To mitigate this risk, investors must thoroughly research and review a company’s financial strength before purchasing shares. APA's cash-to-debt ratio is 0.03, ranking it lower than 91.38% of companies in the Oil & Gas industry. The overall financial strength of APA is 4 out of 10, indicating that its financial strength is poor.
Profitability of APA
Investing in profitable companies, especially those with consistent profitability over the long term, is less risky. APA has been profitable 5 times over the past 10 years. Over the past twelve months, the company had a revenue of $10.4 billion and EPS of $6.15. Its operating margin is 45.25%, ranking better than 84.25% of companies in the Oil & Gas industry. Overall, the profitability of APA is ranked 7 out of 10, indicating fair profitability.
APA's Growth
Growth is a crucial factor in a company's valuation. APA’s 3-year average revenue growth rate is better than 76.73% of companies in the Oil & Gas industry. APA’s 3-year average EBITDA growth rate is 402.8%, ranking better than 99.88% of companies in the Oil & Gas industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) with the weighted cost of capital (WACC) is another way to assess its profitability. APA’s ROIC is 23.82, and its WACC is 9.74, indicating that it generates cash flow effectively relative to the capital invested in its business.
Conclusion
In summary, the stock of APA Corp (APA, Financial) is perceived to be fairly valued. The company's financial condition is poor, but its profitability is fair. Its growth ranks better than 99.88% of companies in the Oil & Gas industry. To learn more about APA stock, you can check out its 30-Year Financials here.
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