Anadarko Petroleum Corp Stock Buy Recommendation Reiterated (APC)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Anadarko Petroleum (NYSE: APC) has been reiterated by TheStreet Ratings as a buy with a ratings score of B- . The company's strengths can be seen in multiple areas, such as its compelling growth in net income, solid stock price performance, good cash flow from operations, expanding profit margins and impressive record of earnings per share growth. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

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Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 156.7% when compared to the same quarter one year prior, rising from -$358.00 million to $203.00 million.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • Net operating cash flow has significantly increased by 206.37% to $2,220.00 million when compared to the same quarter last year. In addition, ANADARKO PETROLEUM CORP has also vastly surpassed the industry average cash flow growth rate of 20.23%.
  • The gross profit margin for ANADARKO PETROLEUM CORP is rather high; currently it is at 65.50%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 5.94% trails the industry average.
  • ANADARKO PETROLEUM CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, ANADARKO PETROLEUM CORP turned its bottom line around by earning $4.74 versus -$5.33 in the prior year. For the next year, the market is expecting a contraction of 13.5% in earnings ($4.10 versus $4.74).

Anadarko Petroleum Corporation engages in the exploration, development, production, and marketing of natural gas, crude oil, condensate, and natural gas liquids (NGLs) in the United States and internationally. Anadarko has a market cap of $43.89 billion and is part of the basic materials sector and energy industry. The company has a P/E ratio of 18.2, above the S&P 500 P/E ratio of 17.7. Shares are up 15.2% year to date as of the close of trading on Tuesday.

You can view the full Anadarko Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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