Apache Corporation Third-Quarter Results: Here's What Analysts Are Forecasting For Next Year
Apache Corporation (NYSE:APA) defied analyst predictions to release its third-quarter results, which were ahead of market expectations. Revenues and losses per share were both better than expected, with revenues of US$1.5b leading estimates by 2.6%. Losses were smaller than analysts expected, coming in at US$0.45 per share. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent forecasts to see whether analysts have changed their earnings models, following these results.
View our latest analysis for Apache
Taking into account the latest results, the current consensus from Apache's 18 analysts is for revenues of US$6.7b in 2020, which would reflect a modest 6.3% increase on its sales over the past 12 months. Apache is also expected to turn profitable, with earnings of US$0.21 per share. In the lead-up to this report, analysts had been modelling revenues of US$6.7b and earnings per share (EPS) of US$0.33 in 2020. Analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a pretty serious reduction to EPS estimates.
The consensus price target held steady at US$25.40, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Apache, with the most bullish analyst valuing it at US$45.00 and the most bearish at US$15.00 per share. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how analyst forecasts compare, both to the Apache's past performance and to peers in the same market. One thing stands out from these estimates, which is that analysts are forecasting Apache to grow faster in the future than it has in the past, with revenues expected to grow 6.3%. If achieved, this would be a much better result than the 12% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the market are forecast to see their revenue grow 3.8% per year. So it looks like Apache is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The biggest highlight of the new consensus is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Apache. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Apache going out to 2023, and you can see them free on our platform here..
It might also be worth considering whether Apache's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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