As of July 18, 2023, APA Corp (APA, Financial) has seen a significant price change of 4.27%, with its stock trading at $37.88. The company's market capitalization stands at $11.7 billion, while its sales amount to $10.4 billion. The GF Value of APA, a unique indicator of the stock's intrinsic worth, is currently pegged at $41.27, suggesting that the stock is fairly valued.
Based in Houston, APA Corp is a renowned independent exploration and production company. It operates primarily in the U.S., Egypt, the North Sea, and Suriname. As of the end of 2022, APA's proved reserves totaled 890 million barrels of oil equivalent, with a net reported production of 400 thousand boe/d that year, 64% of which was oil and natural gas liquids.
GF Value of APA Corp (APA, Financial)
According to GuruFocus's valuation method, the APA stock appears to be fairly valued. The GF Value is calculated based on historical trading multiples, an adjustment factor from GuruFocus, and estimates of future business performance. If the stock price is significantly above the GF Value Line, the stock may be overvalued, and vice versa. Given APA's current trading price, it is estimated to be fairly valued.
As APA is fairly valued, the long-term return of its stock is likely to be close to the rate of its business growth.
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Financial Strength of APA Corp
Before investing in any company, it's crucial to examine its financial strength. APA's cash-to-debt ratio is 0.03, which is lower than 91.38% of companies in the Oil & Gas industry. This suggests that APA's financial strength is relatively poor, ranking 4 out of 10.
Profitability and Growth of APA Corp
APA Corp has been profitable for 5 out of the past 10 years. In the last twelve months, the company reported a revenue of $10.4 billion and an EPS of $6.15. Its operating margin is 45.25%, ranking better than 84.25% of companies in the Oil & Gas industry, indicating fair profitability.
Growth is a crucial factor in a company's valuation. APA's 3-year average annual revenue growth is 24.5%, ranking better than 76.73% of companies in the Oil & Gas industry. The 3-year average EBITDA growth rate is 402.8%, ranking better than 99.88% of companies in the industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) to its weighted average cost of capital (WACC) can provide insights into its profitability. APA's ROIC is 23.82, while its WACC is 9.74, suggesting that the company is likely creating value for its shareholders.
Conclusion
In conclusion, the stock of APA Corp (APA, Financial) is estimated to be fairly valued. Despite its poor financial strength, APA's profitability is fair and its growth ranks better than most 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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