APA (APA): Assessing Valuation After Profit Rebound and Upgraded U.S. Oil Production Guidance

APA (APA) caught extra attention after its latest quarterly earnings, as the company bounced back into profitability from last year’s loss. Investors are also watching because APA raised its U.S. oil production guidance for the coming quarter.

See our latest analysis for APA.

APA’s stock has caught a fresh wave of momentum lately, with a 10.3% 7-day share price return and an impressive 16.6% gain over the past 90 days, as investors responded positively to stronger earnings and updated production guidance. Despite some volatility over the last few years, the stock’s 1-year total shareholder return stands at 14.2%. Long-term holders have benefited from a substantial 147% total return over the past five years.

If APA’s renewed energy has you curious about what else is gaining traction, now’s a perfect moment to broaden your search and discover fast growing stocks with high insider ownership

With shares trending higher but the company still trading below analyst price targets, investors may wonder if APA is currently undervalued and offering an attractive entry point, or if the market is already factoring in the optimistic outlook for future growth.

Most Popular Narrative: 4.4% Undervalued

The most watched narrative puts APA’s fair value just slightly above its latest closing price of $23.89, hinting at a notable upside while analysts call the stock fairly priced overall. This context sets the stage for a deeper look at what is powering that view.

Strong operational improvements, including capital efficiencies in the Permian and Egypt, are significantly reducing drilling and completion costs. This is driving higher production with fewer rigs and unlocking meaningful opportunities to grow margin and free cash flow. Expanded acreage in Egypt, a greater than 35% increase, and the ability to fully pursue both oil and gas under new, higher gas price agreements position APA to capitalize on robust, underexplored resources. This supports sustained volume and revenue growth in a region seeing rising energy demand.

Read the complete narrative.

Want to know exactly how cost breakthroughs and bold international expansion factor into APA's fair value? The narrative hinges on margin transformation and strategic resource bets. Think robust assumptions, possible game-changing outcomes, and a future profit benchmark that is anything but ordinary. Dive in to uncover the real calculations driving these targets.

Result: Fair Value of $25 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing reliance on oil and gas, as well as increased concentration in Egypt, could expose APA to market and geopolitical uncertainties that shift the outlook.

Find out about the key risks to this APA narrative.

Build Your Own APA Narrative

If you see things differently, or would rather shape your own insights from the numbers, you can craft your personal thesis quickly and easily. Do it your way

A great starting point for your APA research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.

More Winning Stock Ideas Worth Your Attention

Don't settle for the usual suspects when fresh, high-potential stock ideas are within reach. Make your next investment move count with options only a click away.

• Tap into potential market disruptors and uncover these 25 AI penny stocks that are revolutionizing industries with cutting-edge artificial intelligence solutions.
• Boost your portfolio’s income by targeting these 14 dividend stocks with yields > 3% that consistently reward shareholders with yields over 3%.
• Get ahead of the curve and back these 27 quantum computing stocks leading the way in quantum computing breakthroughs and tomorrow’s technologies.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com