As you might know, Apache Corporation (NASDAQ:APA) just kicked off its latest quarterly results with some very strong numbers. Apache outperformed on both revenues and the expected loss per share, with revenues of US$1.1b beating estimates by 15%. Statutory losses were US$0.01, 97% smaller thanthe analysts expected. The 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following the recent earnings report, the consensus from 19 analysts covering Apache is for revenues of US$4.32b in 2021, implying a perceptible 7.6% decline in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 99% to US$0.19. Before this latest report, the consensus had been expecting revenues of US$4.32b and US$0.19 per share in losses. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrade to loss per share forecasts for next year.
There's been no major changes to the consensus price target of US$15.12, suggesting that reduced loss estimates are not enough to have a long-term positive impact on the stock's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Apache analyst has a price target of US$23.00 per share, while the most pessimistic values it at US$10.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. One more thing stood out to us about these estimates, and it's the idea that Apache'sdecline is expected to accelerate, with revenues forecast to fall 7.6% next year, topping off a historical decline of 0.3% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 11% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect Apache to suffer worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Apache's revenues are expected to perform worse than the wider industry. 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.
With that in mind, we wouldn't be too quick to come to a conclusion on Apache. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Apache analysts - going out to 2024, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 2 warning signs for Apache that you need to be mindful of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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