Earnings Miss: APA Corporation Missed EPS By 54% And Analysts Are Revising Their Forecasts

APA Corporation (NASDAQ:APA) shareholders are probably feeling a little disappointed, since its shares fell 9.9% to US$29.26 in the week after its latest quarterly results. Statutory earnings per share fell badly short of expectations, coming in at US$0.44, some 54% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at US$1.9b. 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.

See our latest analysis for APA

Following the latest results, APA's 19 analysts are now forecasting revenues of US$9.21b in 2024. This would be a decent 14% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to nosedive 34% to US$4.86 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$9.26b and earnings per share (EPS) of US$5.01 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

The consensus price target held steady at US$41.19, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on APA, with the most bullish analyst valuing it at US$58.00 and the most bearish at US$28.00 per share. 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. It's clear from the latest estimates that APA's rate of growth is expected to accelerate meaningfully, with the forecast 19% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 11% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 2.0% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that APA is expected to grow much faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for APA. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at US$41.19, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple APA analysts - going out to 2026, and you can see them free on our platform here.

Before you take the next step you should know about the 4 warning signs for APA (2 are potentially serious!) that we have uncovered.

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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.