Long-established in the Oil & Gas industry, APA Corp (APA, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 2.93%, juxtaposed with a three-month change of -34.47%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of APA Corp.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 5/10
- Profitability rank: 7/10
- Growth rank: 5/10
- GF Value rank: 4/10
- Momentum rank: 2/10
Based on the above method, GuruFocus assigned APA Corp the GF Score of 69 out of 100, which signals poor future outperformance potential.
Understanding APA Corp's Business
APA Corp is an independent exploration and production company with a market cap of $5.72 billion and sales amounting to $9.74 billion. The company boasts an operating margin of 33.01%. APA Corp develops and produces crude oil, natural gas, and natural gas liquids. Its operations span three geographic areas: the United States, Egypt, and offshore the U.K. in the North Sea. Additionally, APA Corp is actively involved in development, exploration, and appraisal operations in Suriname, with exploration interests in Uruguay, Alaska, and other international locations.
Financial Strength Breakdown
APA Corp's financial strength indicators present some concerning insights about the company's balance sheet health. The company's Altman Z-Score is just 0.96, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years. Additionally, the company's low cash-to-debt ratio at 0.1 indicates a struggle in handling existing debt levels.
Conclusion
APA Corp's financial strength, profitability, and growth metrics, as highlighted by the GF Score, underscore the firm's potential for underperformance. While the company has a strong presence in the oil and gas industry, its financial indicators suggest challenges ahead. Investors should carefully consider these factors when evaluating APA Corp's future prospects. For those seeking companies with stronger GF Scores, GuruFocus Premium members can explore more options using the following screener link: GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
