Investment Thesis
APA Corp demonstrates exceptional financial performance with $4.5B in operating cash flow, 23.5% ROE, and strong profitability generating $1.4B net income. The company maintains solid interest coverage of 9.6x and a moderate debt/equity ratio of 0.74x, indicating healthy financial leverage for a capital-intensive energy producer. Significant insider activity (48 Form 4 filings) combined with strong cash generation suggests management confidence in fundamental value.
APA Strengths
- Exceptional operating cash flow of $4.5B with 100% conversion to free cash flow demonstrates high-quality earnings
- Outstanding return on equity of 23.5% and ROA of 8.1% indicate efficient asset utilization and capital deployment
- Strong interest coverage ratio of 9.6x provides substantial debt service capacity and financial flexibility
- Robust net income of $1.4B with 75.8% EPS growth year-over-year shows accelerating per-share value creation
- Manageable debt-to-equity ratio of 0.74x balances leverage benefits with financial stability
APA Risks
- Current ratio of 0.82x and quick ratio of 0.69x indicate potential near-term liquidity pressure and working capital constraints
- Operating margin transparency is absent, limiting visibility into operational efficiency trends and margin sustainability
- Commodity price exposure inherent to crude oil and natural gas creates revenue volatility and earnings unpredictability
- Capital expenditure data unavailable prevents assessment of reinvestment adequacy and long-term competitive positioning
- Zero reported revenue with operational income and net income present suggests potential data classification issues requiring clarification
Key Metrics to Watch
- Free cash flow conversion ratio and sustainability of $4.5B FCF generation
- Debt reduction trajectory and long-term debt management relative to $4.5B LTD
- Operating cash flow trends and working capital efficiency to address liquidity ratio concerns
- Capital expenditure levels and maintenance capex versus growth capex allocation
- Insider transaction patterns and aggregate insider position changes
APA Financial Metrics
APA Profitability Ratios
APA Balance Sheet & Liquidity
APA 5-Year Financial Trend
5-Year Trend Summary: APA Corp's revenue has remained relatively flat over the 5-year period, with a 0% decline. The most recent EPS of $9.25 reflects profitable operations.
APA Growth Metrics (YoY)
APA Quarterly Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| Q2 2021 | N/A | $316.0M | $0.82 |
| Q1 2021 | N/A | $388.0M | $1.02 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
APA Capital Allocation
APA SEC Filings
Access official SEC EDGAR filings for APA Corp (CIK: 0001841666)