Long-established in the Oil & Gas industry, APA Corp (APA, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 2.99%, juxtaposed with a three-month change of -4.42%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of APA Corp.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 4/10
- Profitability rank: 7/10
- Growth rank: 4/10
- GF Value rank: 8/10
- Momentum rank: 2/10
Based on the above method, GuruFocus assigned APA Corp the GF Score of 67 out of 100, which signals poor future outperformance potential.
Understanding APA Corp's Business
Based in Houston, APA Corp is an independent exploration and production company. It operates primarily in the US, Egypt, the North Sea, and Suriname. At year-end 2023, proved reserves totaled 807 million barrels of oil equivalent, with net reported production of 405 thousand boe/day that year (64% of which was oil and natural gas liquids, with the remainder natural gas). The company has a market cap of $8.54 billion and reported sales of $9.19 billion, with an operating margin of 35.84%.
Financial Strength Breakdown
APA Corp's financial strength indicators present some concerning insights about the company's balance sheet health. The company's Altman Z-Score is just 1.05, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years. Additionally, the company's low cash-to-debt ratio at 0.01 indicates a struggle in handling existing debt levels.
Growth Prospects
A lack of significant growth is another area where APA Corp seems to falter, as evidenced by the company's low Growth rank. Lastly, APA Corp's predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Conclusion
APA Corp's financial strength, profitability, and growth metrics, as highlighted by the GF Score, underscore the firm's potential for underperformance. The company's low financial strength and growth ranks, coupled with a low predictability rank, suggest that investors should approach with caution. As the company navigates these challenges, it remains to be seen how APA Corp will adapt to the evolving landscape of the oil and gas industry. For those interested in exploring companies with stronger GF Scores, GuruFocus Premium members can utilize the following screener link: GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
