March 7, 2024
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 200
APA is listed as a top 10 stock on March 07, 2024 in the market index ASX 200 because of its high performance in at least one of the Obermatt investment strategies. All consolidated Obermatt Ranks are below-average. Based on the Obermatt Method, an investment in the company is not advisable today. Based on the Obermatt 360° View of 6 (6% performer), Obermatt issues an overall sell recommendation for APA on March 07, 2024.
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 | March 7, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 15 |
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| GROWTH | ||||||||
| GROWTH | 41 |
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| SAFETY | ||||||||
| SAFETY | 23 |
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| SENTIMENT | ||||||||
| SENTIMENT | 31 |
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| 360° VIEW | ||||||||
| 360° VIEW | 6 |
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ANALYSIS: With an Obermatt 360° View of 6 (better than 6% 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 all four indicators below average for APA. The consolidated Value Rank has a low rank of 15 which means that the share price of APA is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 85% of alternative stocks in the same industry. The consolidated Growth Rank also has a low rank of 41, which means that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. This means that growth is lower than for 41% of competitors in the same industry. The consolidated Safety Rank has a riskier rank of 23, which means that the company has a riskier financing structure than 77% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. Finally, the consolidated Sentiment Rank has a low rank of 31, which means that professional investors are more pessimistic about the stock than for 69% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated 360° View of 6, APA is worse than 94% of all alternative stock investment opportunities based on the Obermatt Method. This means that APA shares are on the riskier side for investors. As all consolidated Obermatt Ranks are below-average, this is a risky stock investment proposition, especially since professional investor sentiment, the consolidated Obermatt Sentiment Rank, is also low at 31. The negative market view on APA may stem from the high stock price (low value), the low level of growth, or the risky financing structures. That's several problems with no good news anywhere. Based on the current information, we don’t see any compelling arguments to make a case for this stock investment. The company may have a strong future which would justify the high stock price, but this is not confirmed by investor behavior today. While APA may have a bright future, it is reflected in neither the financial indicators nor the market sentiment. ...read more
Sentiment Strategy: Professional Market Sentiment for APA only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 31 (better than 31% 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 of the indicators below and half above average for APA. Analyst Opinions are at a rank of 53 (better than 53% of alternative investments), which means that currently, stock research analysts tend to recommend a stock investment in the company. Market Pulse is also positive with a rank of 68, which means that the current professional news and professional social networks are positive when discussing this company (more positive news than for 68% of competitors). But Analyst Opinions Change is negative with a below 50 rank of 23, which means that stock research experts are changing their opinions for the worse in recommending the company. In other words, they are getting more critical of investments in APA. There are also only so many institutional investors holding company stock with a Professional Investors rank of 13, which means that, currently, professional investors hold less stock in this company than in 87% of alternative investment opportunities. Pros tend to invest in other companies. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 31 (less encouraging than 69% compared with investment alternatives), APA has a reputation among professional investors that is below that of its competitors. The signals are ambivalent. The positive news in the market contradicts the negative change in analyst recommendations. Since the overall analyst recommendations are still above average, the stock may be safer for investing, especially if it is not an extra-large company where Pros tend to be less present. In such a case, the Pro Investor rank is not a problem. ...read more
Value Strategy: APA Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 15 (worse than 85% 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 100% 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 17 which means that the stock price compared with what market professionals expect for future profits is higher than 83% 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 3 which means that the stock price compared with what market professionals expect for future profit levels is higher than 97% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a Price-to-Book Rank of 7 is also low. Compared with invested capital, the stock price is higher than for 93% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 15, 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 low
ANALYSIS: With an Obermatt Growth Rank of 41 (better than 41% compared with alternatives), APA shows a below-average growth dynamic in its industry. There is limited momentum in this company. 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 92 which means that currently, professionals expect the company to grow more than 92% of its competitors. Capital Growth is also above 20% of competitors with a rank of 81. But Profit Growth only has a rank of 20, which means that currently professionals expect the company to grow its profits less than 80% of its competitors. And Stock Returns have also been below average with a rank of only 1. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 41, is a hold recommendation for growth and momentum investors. Profits are sometimes low if the company invests in the future. The positive revenue and capital investment outlook confirms such an interpretation. Both revenues and capital are solid growth indicators, and lower profits in such a case would be encouraging. But the investors see it differently by punishing the share price. Sometimes, Mister Market is not very reliable, because it is not uncommon for it to be volatile. Investors should look out for signs of growth expenditure that could justify low profit growth, and they may also find reasons why recent stock price developments don't confirm the growth outlook of operations. While operating growth indicators are not perfect, they are more reliable indicators for future performance than stock prices that can repeatedly surprise investors. ...read more
Safety Strategy: APA Debt Financing Safety risky
| SAFETY METRICS | March 7, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 5 |
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| REFINANCING | ||||||||
| REFINANCING | 60 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 17 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 23 |
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ANALYSIS: With an Obermatt Safety Rank of 23 (better than 23% 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 just one indicator above average for APA and the other two below average. Refinancing is at 60, meaning the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 60% of its competitors. But Leverage is high with a rank of 5, meaning the company has an above-average debt-to-equity ratio. It has more debt than 95% of its competitors. Liquidity is also on the riskier side with a rank of 17, meaning the company generates less profit to service its debt than 83% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 23 (worse than 77% compared with alternatives), APA has a financing structure that is significantly riskier than that of its competitors. A good Refinancing Rank means that the problems of the company may not be around the corner. But high Leverage is only good if things go well, and low Liquidity is a signal for caution. The financing signals for APA are on the riskier side, requiring the company's future to be on the safer side. Investors may want to look at Growth and Sentiment ranks before making an investment decision. ...read more
Combined financial peformance: APA Lowest Financial Performance
| COMBINED PERFORMANCE | March 7, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 15 |
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| GROWTH | ||||||||
| GROWTH | 41 |
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| SAFETY | ||||||||
| SAFETY | 17 |
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| COMBINED | ||||||||
| COMBINED | 8 |
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ANALYSIS: With an Obermatt Combined Rank of 8 (worse than 92% 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 15 (worse than 85% of alternatives), show below-average growth (Growth Rank of 41), and are riskily financed (Safety Rank of 23), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 8, is a sell recommendation based on APA's financial characteristics. As the company APA's key financial metrics all exhibit below-average performance, such as low value (Obermatt Value Rank of 15), low growth (Obermatt Growth Rank of 41), and risky financing practices (Obermatt Safety Rank of 23), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. Such poor financial performance sometimes indicates that the company's business is all concentrated in some distant future. This is sometimes the case for high-tech or biotechnology companies. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and risky today. In such cases, the Obermatt Method has limited value as it is based on facts we can observe today. If the facts are all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that should only amount to a small fraction of a safe portfolio. ...read more
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