Long-established in the Oil & Gas industry, APA Corp (APA, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a daily loss of 4.56%, juxtaposed with a three-month change of -34.43%. 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.
Understanding 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.
Company Overview: APA Corp (APA, Financial)
APA Corp is an independent exploration and production company with a market cap of $5.56 billion. It develops and produces crude oil, natural gas, and natural gas liquids. The company's operations span three geographic areas: the United States, Egypt, and offshore the U.K. in the North Sea. APA Corp also has active development, exploration, and appraisal operations ongoing in Suriname, as well as exploration interests in Uruguay, Alaska, and other international locations. With sales amounting to $9.737 billion and an operating margin of 33.01%, APA Corp has a significant presence in the energy sector.
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 0.97, 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: Potential for Underperformance
Given the company's financial strength, profitability, and growth metrics, the GF Score highlights APA Corp's potential for underperformance. The low scores in financial strength and momentum, coupled with a moderate growth rank, suggest that APA Corp may face challenges in maintaining its historical performance levels. Investors should consider these factors when evaluating the company'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.
