A month has gone by since the last earnings report for APA (
APA Quick Quote APA - Free Report) . Shares have added about 14.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is APA due for a pullback? 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 Q1 Earnings Undershoot Estimates
APA reported first-quarter 2022 adjusted earnings per share of $1.92, missing the Zacks Consensus Estimate of $2.08. The underperformance reflects lower-than-expected production and a rise in costs. Precisely, the average daily output came in at 404,042 barrels of oil-equivalent per day (BOE/d), falling short of the consensus mark of 408,000 BOE/d.
However, APA’s bottom line was well above the year-earlier quarter's adjusted profit of 92 cents due to sharply higher commodity prices. Revenues of $2.7 billion outpaced the Zacks Consensus Estimate of $2.6 billion million and surged 42.7% from the year-ago quarter’s sales of $1.9 billion. As promised, the company is using the excess cash from a supportive environment to reward them with dividends and buybacks. APA bought back 7.2 million shares at $36 apiece during the first quarter. Since APA started the program in October last year, 38.4 million shares have been repurchased in total, till Mar 31, at an average price of $28.83. The company also shelled out $43 million in dividend payment. Production & Selling Prices
Production of oil and natural gas averaged 404,042 BOE/d, which comprises 63% liquids. The figure increased around 5.7% from the year-ago quarter.
U.S. output (accounting for 52% of the total) remained essentially unchanged year over year at 210,953 BOE/d, while production from the company’s international operations increased some 12.1% to 193,089 BOE/d. APA’s oil and natural gas liquids (NGLs) production was 253,596 barrels per day (Bbl/d). Natural gas output totaled 902,680 thousand cubic feet per day (Mcf/d). The average realized crude oil price during the first quarter was $100.23 per barrel, up 68.1% from the year-ago realization of $59.62. The number also came in ahead of the Zacks Consensus Estimate of $91. Meanwhile, the average realized natural gas price jumped to $4.70 per thousand cubic feet (Mcf) from $4.14 in the year-ago period and beat the consensus mark of $4.24. Costs & Financial Position
APA’s first-quarter lease operating expenses totaled $344 million, up 30.3% from the year-ago period. However, a 28.9% drop in costs on oil and gas purchased meant that total operating expenses rose just 3.9% from the corresponding period of 2021 to $1.5 billion.
During the quarter under review, APA generated $891 million of cash from operating activities while it incurred $361 million in upstream capital expenditures. The company reported an adjusted operating cash flow of $1.2 billion in the first quarter. It also made free cash flow of $675 million during the period, up from $511 million a year. As of Mar 31, APA had approximately $234 million in cash and cash equivalents, and $5.8 billion in long-term debt. Guidance
APA expects adjusted production to average 313,000 BOE/d in Q2 and 323,000 BOE/d in 2022 (lower than the previous guidance of 328,000 BOE/d on a scaled-down view of Egypt and North Sea). Of this, oil volumes are likely to be 140,000 Bbl/d and 149,000 Bbl/d for Q2 and 2022, respectively. Meanwhile, the company bumped up its upstream capital expenditure by nearly 8% to $1.7 billion. The budget hike can be attributed to higher activity in Suriname and incremental non-operated spending in the U.S. APA has committed to return at least 60% of free cash flow to its shareholders.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted 8.96% due to these changes.
At this time, APA has a strong Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 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.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, APA has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
APA belongs to the Zacks Oil and Gas - Exploration and Production - United States industry. Another stock from the same industry, Gulfport Energy (
GPOR Quick Quote GPOR - Free Report) , has gained 4.1% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.
Gulfport reported revenues of $480.73 million in the last reported quarter, representing a year-over-year change of