Long-established in the Oil & Gas industry, APA Corp (APA, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 0.49%, juxtaposed with a three-month change of 33.33%. 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.
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 is an independent exploration and production company with a market capitalization of $7.08 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. Additionally, APA Corp has active development, exploration, and appraisal operations in Suriname, as well as exploration interests in Uruguay, Alaska, and other international locations. With sales amounting to $10.42 billion and an operating margin of 32.37%, APA Corp remains a significant player 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 1.15, 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 0.01 indicates a struggle in handling existing debt levels.
Conclusion
APA Corp's financial strength, profitability, and growth metrics, as highlighted by the GF Score, suggest that the firm may face challenges in achieving future outperformance. While the company has a strong presence in the oil and gas industry, its current financial indicators raise concerns about its ability to sustain growth and manage debt effectively. Investors should consider these factors when evaluating APA Corp's potential for future success. For those interested in exploring companies with stronger GF Scores, GuruFocus Premium members can utilize 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.
