Yahoo Finance APA (APA) Down 0.7% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for APA (APA). Shares have lost about 0.7% 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 the most recent earnings report in order to get a better handle on the important drivers.
APA Q1 Earnings & Sales Top Estimates
APA reported first-quarter 2023 adjusted earnings of $1.19 per share, beating the Zacks Consensus Estimate of 98 cents. The outperformance primarily reflects lower operating expenses and higher-than-expected production. Precisely, the average daily output came in at 394,249 barrels of oil equivalent per day (BOE/d), ahead of the consensus mark of 389,000 BOE/d.
However, the bottom line dropped from the year-ago adjusted figure of $1.92 due to significantly lower oil prices.
Revenues of $2 billion outpaced the Zacks Consensus Estimate of $1.9 billion but were down 47% from the year-ago quarter’s sales.
As promised, the company is using the excess cash to reward shareholders with dividends and buybacks. APA bought back 3.7 million shares at $38.93 apiece during the first quarter. The company also shelled out $78 million in dividend payment.
Production & Selling Prices
Production of oil and natural gas averaged 394,249 BOE/d, which comprises 65% liquids. The figure decreased 2.4% from the year-ago quarter.
U.S. output (accounting for 51% of the total) fell 4.4% year over year to 201,580 BOE/d, while production from the company’s international operations decreased a marginal 0.2% to 192,669 BOE/d. APA’s oil and natural gas liquids (NGLs) production was 254,543 barrels per day (Bbl/d). Natural gas output totaled 838,237 thousand cubic feet per day (Mcf/d).
The average realized crude oil price during the first quarter was $78.37 per barrel, down 21.8% from the year-ago realization of $100.23. The number also came below the Zacks Consensus Estimate of $79. Meanwhile, the average realized natural gas price fell to $3.22 per thousand cubic feet (Mcf) from $4.70 in the year-ago period but beat the consensus mark of $3.
Costs & Financial Position
APA’s first-quarter lease operating expenses totaled $321 million, down 6.7% from the year-ago period. Moreover, a significant decline in costs of oil and gas purchased meant that total operating expenses fell 20.3% from the corresponding period of 2022 to $1.2 billion.
During the quarter under review, APA generated $335 million of cash from operating activities while it incurred $495 million in upstream capital expenditures. The company reported an adjusted operating cash flow of $846 million in the first quarter. It also registered a free cash flow of $272 million during the period, though it was down from $675 million a year ago.
As of Mar 31, APA had approximately $154 million in cash and cash equivalents, and $5.8 billion in long-term debt. The debt-to-capitalization ratio of the company was 92.9.
Guidance
APA expects adjusted production to average 323,000-325,000 BOE/d in Q2 and 330,000-334,000 BOE/d in 2023. Of this, oil volumes are likely to be 150,000 Bbl/d and 159,000 Bbl/d for Q2 and 2023, respectively. Meanwhile, the company pegged its upstream capital expenditure for the year between $1.9 billion and $2 billion. APA is committed to returning 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 -23.1% due to these changes.
VGM Scores
At this time, APA has a nice Growth Score of B, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
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.
Performance of an Industry Player
APA is part of the Zacks Oil and Gas - Exploration and Production - United States industry. Over the past month, Matador Resources (MTDR), a stock from the same industry, has gained 6.2%. The company reported its results for the quarter ended March 2023 more than a month ago.
Matador reported revenues of $560.28 million in the last reported quarter, representing a year-over-year change of -1%. EPS of $1.50 for the same period compares with $2.32 a year ago.
Matador is expected to post earnings of $1.57 per share for the current quarter, representing a year-over-year change of -54.8%. Over the last 30 days, the Zacks Consensus Estimate has changed -2.2%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Matador. Also, the stock has a VGM Score of B.
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