Shares of APA (
APA Quick Quote APA - Free Report) have been strong performers lately, with the stock up 21.2% over the past month. The stock hit a new 52-week high of $25.33 in the previous session. APA has gained 72.1% since the start of the year compared to the 35.9% move for the Zacks Oils-Energy sector and the 111.7% return for the Zacks Oil and Gas - Exploration and Production - United States industry. What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on August 4, 2021, APA reported EPS of $0.7 versus consensus estimate of $0.54 while it beat the consensus revenue estimate by 7.17%.
For the current fiscal year, APA is expected to post earnings of $3.42 per share on $7.61 billion in revenues. This represents a 416.67% change in EPS on a 74.11% change in revenues. For the next fiscal year, the company is expected to earn $3.42 per share on $7.13 billion in revenues. This represents a year-over-year change of -0.1% and -6.26%, respectively.
APA may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
APA has a Value Score of B. The stock's Growth and Momentum Scores are B and A, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 7.1X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 6.8X versus its peer group's average of 5.8X. Additionally, the stock has a PEG ratio of 0.41. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, APA currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if APA passes the test. Thus, it seems as though APA shares could have a bit more room to run in the near term.
How Does APA Stack Up to the Competition?
Shares of APA have been rising, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including Bonanza Creek Energy , EOG Resources (
EOG Quick Quote EOG - Free Report) , and Cheniere Energy ( LNG Quick Quote LNG - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 10% of all the industries we have in our universe, so it looks like there are some nice tailwinds for APA, even beyond its own solid fundamental situation.