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APA (APA) Down 10% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for APA (APA - Free Report) . Shares have lost about 10% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is APA due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
APA Q3 Earnings Top Estimates
APA reported third-quarter 2021 earnings per share — excluding one-time items — of 98 cents, beating the Zacks Consensus Estimate of 89 cents. In the year-earlier quarter, the company reported a loss of 16 cents per share. The outperformance reflects stronger price realizations and better-than-expected domestic production. The average daily U.S. output came in at 237,498 barrels of oil-equivalent per day (BOE/d), beating the Zacks Consensus Estimate of 233,000 BOE/d.
Revenues of $2.06 billion outpaced the Zacks Consensus Estimate of $1.76 billion. Moreover, the top line rose 83.83% from the year-ago quarter’s sales of $1.12 billion.
APA’s board of directors declared a quarterly dividend of 12.5 cents per share for the third quarter. This signifies a 100% hike in its quarterly payout from its previous levels of 6.25 cents. The amount will be paid out on Feb 22, 2022 to its shareholders of record as of Jan 21, 2022. APA management sees the dividend hike as its commitment toward returning ‘a higher percentage of cash flow’ to its investors.
Production & Selling Prices
Production of oil and natural gas averaged 388,981 BOE/d, which comprises 64.7% liquids. The figure dropped 13% from the year-ago quarter’s level.
The U.S. output (accounting for 70.7% of the total) fell 8% year over year to 237,498 BOE/d while production from the company’s international operations decreased 19% to 151,483 BOE/d. APA’s oil and natural gas liquids (NGLs) production was 251,797 barrels per day (Bbl/d). Natural gas output totaled 823,104 thousand cubic feet per day (Mcf/d).
The average realized crude oil price during the third quarter was $71.72 per barrel, up 75.4% from the year-ago realization of $40.88. Moreover, the number came ahead of the Zacks Consensus Estimate of $71. The average realized natural gas price increased to $3.87 per thousand cubic feet (Mcf) from $1.9 in the year-ago period and also topped the Zacks Consensus Estimate of $3.57.
Costs & Financial Position
APA’s third-quarter lease operating expenses totaled $316 million, up 22% from the year-ago level. Moreover, total operating expenses jumped 42.6% from the level recorded in the corresponding period of 2020 to $1.53 billion. Apart from a rise in lease operating expenses, the deterioration was due to higher purchased oil and gas expenses, and steep impairment charges.
During the quarter under review, APA generated $771 million of cash from operating activities. It spent $228 million on upstream capital expenditures. The company reported an adjusted operating cash flow of $866 million in the third quarter.
As of Sep 30, APA had $377 million worth cash and cash equivalents, and $6.54 billion of long-term debt.
Guidance
The U.S. energy explorer revises its 2021 outlook and expects to generate $2 billion of free cash flow this year, majority of which will be utilized in paying down its net debt. The firm aims to return more than 60% of free cash flow to its shareholders in the fourth quarter.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 11.23% due to these changes.
VGM Scores
At this time, APA has a great Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise APA has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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APA (APA) Down 10% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for APA (APA - Free Report) . Shares have lost about 10% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is APA due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
APA Q3 Earnings Top Estimates
APA reported third-quarter 2021 earnings per share — excluding one-time items — of 98 cents, beating the Zacks Consensus Estimate of 89 cents. In the year-earlier quarter, the company reported a loss of 16 cents per share. The outperformance reflects stronger price realizations and better-than-expected domestic production. The average daily U.S. output came in at 237,498 barrels of oil-equivalent per day (BOE/d), beating the Zacks Consensus Estimate of 233,000 BOE/d.
Revenues of $2.06 billion outpaced the Zacks Consensus Estimate of $1.76 billion. Moreover, the top line rose 83.83% from the year-ago quarter’s sales of $1.12 billion.
APA’s board of directors declared a quarterly dividend of 12.5 cents per share for the third quarter. This signifies a 100% hike in its quarterly payout from its previous levels of 6.25 cents. The amount will be paid out on Feb 22, 2022 to its shareholders of record as of Jan 21, 2022. APA management sees the dividend hike as its commitment toward returning ‘a higher percentage of cash flow’ to its investors.
Production & Selling Prices
Production of oil and natural gas averaged 388,981 BOE/d, which comprises 64.7% liquids. The figure dropped 13% from the year-ago quarter’s level.
The U.S. output (accounting for 70.7% of the total) fell 8% year over year to 237,498 BOE/d while production from the company’s international operations decreased 19% to 151,483 BOE/d. APA’s oil and natural gas liquids (NGLs) production was 251,797 barrels per day (Bbl/d). Natural gas output totaled 823,104 thousand cubic feet per day (Mcf/d).
The average realized crude oil price during the third quarter was $71.72 per barrel, up 75.4% from the year-ago realization of $40.88. Moreover, the number came ahead of the Zacks Consensus Estimate of $71. The average realized natural gas price increased to $3.87 per thousand cubic feet (Mcf) from $1.9 in the year-ago period and also topped the Zacks Consensus Estimate of $3.57.
Costs & Financial Position
APA’s third-quarter lease operating expenses totaled $316 million, up 22% from the year-ago level. Moreover, total operating expenses jumped 42.6% from the level recorded in the corresponding period of 2020 to $1.53 billion. Apart from a rise in lease operating expenses, the deterioration was due to higher purchased oil and gas expenses, and steep impairment charges.
During the quarter under review, APA generated $771 million of cash from operating activities. It spent $228 million on upstream capital expenditures. The company reported an adjusted operating cash flow of $866 million in the third quarter.
As of Sep 30, APA had $377 million worth cash and cash equivalents, and $6.54 billion of long-term debt.
Guidance
The U.S. energy explorer revises its 2021 outlook and expects to generate $2 billion of free cash flow this year, majority of which will be utilized in paying down its net debt. The firm aims to return more than 60% of free cash flow to its shareholders in the fourth quarter.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 11.23% due to these changes.
VGM Scores
At this time, APA has a great Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise APA has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.