Need To Know: The Consensus Just Cut Its APA Corporation (NASDAQ:APA) Estimates For 2024

One thing we could say about the analysts on APA Corporation (NASDAQ:APA) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

After the downgrade, the consensus from APA's 17 analysts is for revenues of US$7.8b in 2024, which would reflect a perceptible 3.1% decline in sales compared to the last year of performance. Statutory earnings per share are supposed to nosedive 32% to US$5.00 in the same period. Previously, the analysts had been modelling revenues of US$9.3b and earnings per share (EPS) of US$5.11 in 2024. It looks like analyst sentiment has fallen somewhat in this update, with a measurable cut to revenue estimates and a small dip in earnings per share numbers as well.

View our latest analysis for APA

Despite the cuts to forecast earnings, there was no real change to the US$41.54 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 4.1% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 11% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 2.1% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - APA is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on APA after today.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with APA's financials, such as dilutive stock issuance over the past year. Learn more, and discover the 2 other risks we've identified, for free on our platform here.

We also provide an overview of the APA Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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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.