APA Corporation Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

As you might know, APA Corporation (NASDAQ:APA) just kicked off its latest quarterly results with some very strong numbers. Statutory revenue of US$2.8b and earnings of US$1.46 both blasted past expectations, beating expectations by 22% and 72%, respectively, ahead of expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for APA

Taking into account the latest results, the most recent consensus for APA from 22 analysts is for revenues of US$9.34b in 2024. If met, it would imply a reasonable 7.2% increase on its revenue over the past 12 months. Statutory earnings per share are expected to dive 45% to US$4.31 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$9.05b and earnings per share (EPS) of US$3.55 in 2024. So it seems there's been a definite increase in optimism about APA's future following the latest results, with a great increase in the earnings per share forecasts in particular.

Despite these upgrades,the analysts have not made any major changes to their price target of US$38.82, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values APA at US$57.00 per share, while the most bearish prices it at US$27.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting APA's growth to accelerate, with the forecast 15% annualised growth to the end of 2024 ranking favourably alongside historical growth of 11% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 2.5% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect APA to grow faster than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards APA following these results. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. The consensus price target held steady at US$38.82, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple APA analysts - going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with APA (at least 1 which shouldn't be ignored) , and understanding them should be part of your investment process.

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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