It has been about a month since the last earnings report for APA (
APA Quick Quote APA - Free Report) . Shares have lost about 13.1% 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 drivers.
APA Q4 Earnings & Sales Top Estimates
APA Corporation reported fourth-quarter 2022 adjusted earnings of $1.48 per share, beating the Zacks Consensus Estimate of $1.44 and increasing from the year-ago quarter’s income of $1.29.
The quarterly numbers reflect a lower operating expense and higher-than-expected production. Precisely, the average daily output came in at 414,435 barrels of oil equivalent per day (BOE/d), ahead of the consensus mark of 405,000 BOE/d. Revenues of $2.4 billion outpaced the Zacks Consensus Estimate of $2.3 billion but edged down 1% from the year-ago quarter’s sales due to sharply lower gas realizations. As promised, the company is using the excess cash from a supportive environment to reward them with dividends and buybacks. APA bought back 12.1 million shares at $44.40 apiece during the fourth quarter. The company also shelled out $80 million in dividend payment. Production & Selling Prices
Production of oil and natural gas averaged 414,435 BOE/d, which comprises 64% liquids. The figure increased 7.5% from the year-ago quarter.
U.S. output (accounting for 53% of the total) fell 4.5% year over year to 217,830 BOE/d but production from the company’s international operations increased some 24.7% to 196,605 BOE/d. APA’s oil and natural gas liquids (NGLs) production was 267,073 barrels per day (Bbl/d). Natural gas output totaled 884,169 thousand cubic feet per day (Mcf/d). The average realized crude oil price during the fourth quarter was $86.17 per barrel, up 9.7% from the year-ago realization of $78.52. However, the number came below the Zacks Consensus Estimate of $88. Meanwhile, the average realized natural gas price fell to $4.04 per thousand cubic feet (Mcf) from $4.95 in the year-ago period and badly missed the consensus mark of $5.69. Costs & Financial Position
APA’s fourth-quarter lease operating expenses totaled $377 million, up 7.7% from the year-ago period. However, a significant decline in costs of oil and gas purchased meant that total operating expenses fell 9.8% from the corresponding period of 2021 to $1.6 billion.
During the quarter under review, APA generated $1.4 billion of cash from operating activities while it incurred $486 million in upstream capital expenditures. The company reported an adjusted operating cash flow of $1 billion in the fourth quarter. It also registered a free cash flow of $360 million during the period, though it was down from $466 million a year ago. As of Dec 31, APA had approximately $245 million in cash and cash equivalents, and $5.5 billion in long-term debt. The debt-to-capitalization ratio of the company was 80.2. Guidance
APA expects adjusted production to average 312,000-314,000 BOE/d in Q1 and 330,000-334,000 BOE/d in 2023. Of this, oil volumes are likely to be 147,000 Bbl/d and 159,000 Bbl/d for Q1 and 2023, respectively. Meanwhile, the company pegged its upstream capital expenditure for the year between $2 billion and $2.1 billion. 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, estimates review have trended downward during the past month.
The consensus estimate has shifted -22.54% due to these changes.
At this time, APA has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% 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 indicates a downward shift. Notably, APA has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.