November 9, 2023
Top 10 Stock APA Sell Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: APA – Top 10 Stock in Australian Securities Exchange Index ASX 50
APA is listed as a top 10 stock on November 09, 2023 in the market index ASX 50 because of its high performance in at least one of the Obermatt investment strategies. Only one consolidated Obermatt Rank is above-average. The company is growing above average, but all other facts speak against a stock purchase, especially the low market sentiment by professional investors. Based on the Obermatt 360° View of 5 (5% performer), Obermatt issues an overall sell recommendation for APA on November 09, 2023.
Snapshot: Obermatt Ranks
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View APA Sell
| 360 METRICS | November 9, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 7 |
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| GROWTH | ||||||||
| GROWTH | 51 |
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| SAFETY | ||||||||
| SAFETY | 17 |
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| SENTIMENT | ||||||||
| SENTIMENT | 29 |
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| 360° VIEW | ||||||||
| 360° VIEW | 5 |
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ANALYSIS: With an Obermatt 360° View of 5 (better than 5% compared with alternatives), overall professional sentiment and financial characteristics for the stock APA are critical, mostly below average. The 360° View is based on consolidating four consolidated indicators, with three out of four indicators below average for APA. The consolidated Growth Rank has a good rank of 51, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth, as well as stock returns. It ranks higher than 51% of competitors in the same industry. The other indicators are below average, namely the Value, Safety, and Sentiment Ranks.The Value Rank at 7 means that the share price of APA is on the high side compared with its peers regarding revenues, profits, and invested capital. The stock price is higher than for 93% of alternative stocks in the same industry. The consolidated Safety Rank has a riskier rank of 17, which means that the company has a riskier financing structure than 83% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. The consolidated Sentiment Rank also has a low rank of 29, indicating professional investors are more pessimistic about the stock than for 71% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated 360° View of 5, APA is worse than 95% of all alternative stock investment opportunities based on the Obermatt Method. This means that APA shares are on the riskier side for investors. As only one of the consolidated Obermatt Ranks exhibits excellent performance, namely the above-average growth (Growth Rank of 51), it is a riskier stock investment proposition. Aside from the critical professional market sentiment (Sentiment Rank of 29), the company is rather risky when it comes to financing (Safety Rank of 17). The negative market view on APA may be due to the high stock price (low value). A growth company like this may get too expensive at one point in time. If too many investors are desperate to join the party, they may drive stock prices above reasonable levels. While it is typical for growth companies to have low value, because investors are willing to pay more for companies that are expected to have high growth, the crucial question is: how much more do you pay for the stock of APA compared with alternatives? You can use the following rule of thumb: The value rank shouldn’t be lower than one minus the growth rank. For example, if the growth rank is at 75, and the value rank is at 5, you should tread carefully. If the value rank is at 40, it still might be a good value (even though it is lower than 50). As market sentiment is critical, you should be careful with paying more than market-average for this stock and conduct further research into the company's future growth potential. ...read more
Sentiment Strategy: Professional Market Sentiment for APA only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 29 (better than 29% compared with alternatives), overall professional sentiment and engagement for the stock APA is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with half the indicators below and half above average for APA. Analyst Opinions are at a rank of 45 (worse than 55% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. Worse, Analyst Opinions Change has a rank of 22, which means that stock research experts are getting even more pessimistic. In addition, the Professional Investors rank is 18, which means that professional investors hold less stock in this company than in 82% of alternative investment opportunities. Pros tend to invest in other companies. The only positive sentiment indicator for APA is Market Pulse, with a rank of 76, which means that the current professional news and professional social networks tend to be positive when discussing this company (more positive news than for 76% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 29 (less encouraging than 71% compared with investment alternatives), APA has a reputation among professional investors that is below that of its competitors. This is an ambiguous picture: analysts are negative and getting even more critical while the news in the market is positive. Who should investors believe? This is a difficult question in such a situation. Investors should proceed cautiously and verify not only the financial performance in the Obermatt Value, Growth and Safety Ranks but also independent news coverage of the company. ...read more
Value Strategy: APA Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 7 (worse than 93% compared with alternatives), APA shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators below average for APA. Only the metric dividend yield has an above-average rank, reflecting that dividend practices are expected to be higher than 97% of comparable companies, making the stock an attractive buy for dividend investors. However, dividend investors may get disappointed because all other critical financial indicators are below the market median: Price-to-Sales is 7 which means that the stock price compared with what market professionals expect for future profits is higher than 93% of comparable companies, indicating a low value concerning APA's sales levels. The same is valid for Price-to-Profit (also referred to as price-earnings, P/E) with a rank of 5 which means that the stock price compared with what market professionals expect for future profit levels is higher than 95% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a Price-to-Book Rank of 1 is also low. Compared with invested capital, the stock price is higher than for 99% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 7, is a sell recommendation based on APA's stock price compared with the company's operational size and dividend yields. Should dividend investors pick APA? The company-reported financials speak against it. The company is expensive compared with revenue and invested capital levels, two reliable company size indicators. In addition, it currently has a low level of profits. How can future dividends be paid in the case that profits remain low? Dividend investors should choose APA only if they reasonably expect the low current profit levels to be transitory. ...read more
Growth Strategy: APA Growth Momentum good
ANALYSIS: With an Obermatt Growth Rank of 51 (better than 51% compared with alternatives), APA shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for APA. Sales Growth has a rank of 88, which means that, currently, professionals expect the company to grow more than 88% of its competitors. Profit Growth with a rank of 56 is also above average. But Capital Growth has only a rank of 46, and Stock Returns with 9 are also below-average. Stock returns for APA have recently been below 91% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 51, is a buy recommendation for growth and momentum investors. Are investors forecasting troubles based on the lack of operating investment activity at the company? This could be one explanation as to why stock returns are low. But stock returns can also be the result of correcting an error in the past, in this case, an overly optimistic outlook on the future, which is now more realistic. The Value Ranks may confirm such a picture. The more important growth indicators are revenues and profits, which are both above average for APA. This is a positive sign from the company's operational side and may give investors courage, despite the poor recent stock price performance. ...read more
Safety Strategy: APA Debt Financing Safety risky
| SAFETY METRICS | November 9, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 4 |
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| REFINANCING | ||||||||
| REFINANCING | 41 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 15 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 17 |
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ANALYSIS: With an Obermatt Safety Rank of 17 (better than 17% compared with alternatives), the company APA has much riskier financing practices than comparable other companies, which means that their overall debt burden is significantly above the industry average. This doesn't mean that the business of APA is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with all three metrics below average for APA. Liquidity is at 15, meaning that the company generates less profit to service its debt than 85% of its competitors. This indicates that the company is on the riskier side when it comes to debt service. Even worse, Leverage is at a rank of 4, meaning the company has an above-average debt-to-equity ratio. It has more debt than 96% of its competitors. Finally, Refinancing is at a rank of 41 which means that the portion of the debt about to be refinanced is above average. It has more debt in the refinancing stage than 59% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 17 (worse than 83% compared with alternatives), APA has a financing structure that is significantly riskier than that of its competitors. This combination is rather dangerous in most situations. Only very promising companies with bright future outlooks and stellar reputations can operate with such risky financing.
Combined financial peformance: APA Lowest Financial Performance
| COMBINED PERFORMANCE | November 9, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 7 |
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| GROWTH | ||||||||
| GROWTH | 51 |
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| SAFETY | ||||||||
| SAFETY | 15 |
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| COMBINED | ||||||||
| COMBINED | 5 |
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ANALYSIS: With an Obermatt Combined Rank of 5 (worse than 95% compared with investment alternatives), APA (Gas Utilities, Australia) shares have lower financial characteristics compared with similar stocks. Shares of APA are low in value (priced high) with a consolidated Value Rank of 7 (worse than 93% of alternatives), and are riskily financed (Safety Rank of 17, which means above-average debt burdens) but show above-average growth (Growth Rank of 51). ...read more
RECOMMENDATION: A Combined Rank of 5, is a sell recommendation based on APA's financial characteristics. As the company APA shows low value with an Obermatt Value Rank of 7 (93% of comparable investments are less expensive), investors should look at the other ranks. In this case, growth is expected to be above-average, better than 51% of comparable companies (Obermatt Growth Rank is 51). This is a typical case. Companies with above average growth tend to cost more than stocks with slower growth expectations. If this is a high-growth company, the low Obermatt Safety Rank of 17 is a good sign. The more debt a well-performing company has, the higher the returns to shareholders. However, if growth turns negative or interest rates increase, high debt may become a burden. If you believe the future is bright for APA, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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