Anadarko Petroleum (APC) Stock Lower After Pulling Bid for Apache

Anadarko Petroleum (APC) stock is down after the company withdrew its bid for rival Apache (APC).
By Amanda Schiavo ,

NEW YORK (TheStreet) -- Anadarko Petroleum (APC) - Get Report stock is down by 1.99% to $62.18 in mid-morning trading on Wednesday, after the oil and gas exploration company withdrew its bid for rival Apache Corp. (APC).

The company's efforts to enter into a "mutually acceptable" confidentiality agreement with Apache were rejected and "no discussions of substance occurred," Anadarko said in a statement.

"The proposed all-stock transaction, which included a modest premium, would have been highly accretive to Anadarko on a cash flow per-share basis, even before synergies," Anadarko continued.

"Further, based on public information and Apache's historic financial and operating underperformance, the proposed transaction offered shareholders of both companies numerous value-creation opportunities given Anadarko's demonstrated success at building value through operational excellence, proven capital allocation, and active portfolio management," the statement went on to say.

Shares of Apache are down by 4.95% to $50.63 in mid-morning trading today.

Separately, TheStreet Ratings team rates ANADARKO PETROLEUM CORP as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

We rate ANADARKO PETROLEUM CORP (APC) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow and generally high debt management risk.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 305.6% when compared to the same quarter one year ago, falling from $1,087.00 million to -$2,235.00 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ANADARKO PETROLEUM CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ANADARKO PETROLEUM CORP is rather low; currently it is at 23.45%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -100.22% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to $1,127.00 million or 51.48% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • The debt-to-equity ratio of 1.13 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, APC's quick ratio is somewhat strong at 1.02, demonstrating the ability to handle short-term liquidity needs.
  • You can view the full analysis from the report here: APC

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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