Why Apache (APA) Stock Is Gaining Today

NEW YORK (TheStreet) -- Shares of Apache Corp. (APA) are up 1.05% to $98.14 after it was reported that the oil producer, under investor pressure to shed its international assets, is seeking to raise up to $840 million from the sale of oil and gas projects in Alberta, sources told Bloomberg.

Apache is working with Bank of Nova Scotia  (BNS) to sell the assets in the Provost region, Bloomberg said.

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Apache, with a market value of more than $37 billion, expects to raise $600 million to $840 million from the sale, sources added.

The sale is a small part of a broader restructuring under way at the oil and gas producer, which is being pushed by activist investor Jana Partners LLC to focus on more lucrative U.S. oil projects, Bloomberg noted.

TheStreet Ratings team rates APACHE CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate APACHE CORP (APA) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

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

  • APA's debt-to-equity ratio is very low at 0.30 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.81 is somewhat weak and could be cause for future problems.
  • APACHE CORP's earnings per share declined by 48.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, APACHE CORP increased its bottom line by earning $5.63 versus $4.91 in the prior year. This year, the market expects an improvement in earnings ($6.68 versus $5.63).
  • The gross profit margin for APACHE CORP is currently very high, coming in at 71.33%. Regardless of APA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, APA's net profit margin of 13.61% compares favorably to the industry average.
  • APA, with its decline in revenue, slightly underperformed the industry average of 3.0%. Since the same quarter one year prior, revenues slightly dropped by 7.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: APA Ratings Report
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