Apache (APA) Stock Down on Oil Price Decline

Apache (APA) stock is falling as oil prices drop.
By Amanda Schiavo ,

NEW YORK (TheStreet) -- Shares of Apache Corp. (APA) - Get Report are declining by 2.17% to $48.79 in early afternoon trading on Wednesday, as the energy sector takes a hit from today's decline in oil prices.

Higher U.S. crude stockpiles, a strong dollar and falling gas prices are all weighing on the price of the commodity.

Apache is an independent energy company that explores for, develops, and produces natural gas, crude oil, and natural gas liquids.

Crude inventories in the U.S. gained for a sixth consecutive week last week by 2.85 million barrels, according to data from the Energy Information Administration.

"Oil inventories have built by a fairly chunky amount despite refinery utilization increasing, and imports dropping," ClipperData director of commodity research told Reuters.

Crude oil (WTI) is down by 3.11% to $46.41 per barrel this afternoon and Brent crude is lower by 3.54% to $48.75 per barrel, according to the CNBC.com index.

Additionally, Apache is expected to release its 2015 third quarter earnings results before the market open on Thursday.

Analysts surveyed by Thomson Reuters are expecting the company to post a loss of 36 cents per share on revenue of $1.58 billion for the most recent quarter.

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

We rate APACHE CORP (APA) a SELL. This is driven by a number of negative factors, 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, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

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 1208.9% when compared to the same quarter one year ago, falling from $505.00 million to -$5,600.00 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, APACHE CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $1,283.00 million or 45.14% 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.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 39.03%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 1201.70% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • APACHE CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, APACHE CORP swung to a loss, reporting -$13.46 versus $5.95 in the prior year. This year, the market expects an improvement in earnings (-$0.82 versus -$13.46).
  • You can view the full analysis from the report here: APA

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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