APA Corporation (APA): what the price requires
The current priced-in claim for APA Corporation (APA) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.
Generated: 2026-07-14 · Exported: 2026-07-17 · Source: https://boothcheck.com/report/APA
Headline
| Field | Value |
|---|---|
| Ticker | APA |
| Company | APA Corporation |
| Current price | $34.53/sh |
| Composition | Oil revenues 65% / Natural gas revenues 9% / Natural gas liquids revenues 7% / Purchased oil and gas sales 19% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Multiple paid | 6x operating income |
The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.
Solve inputs: computed at a 8.9% cost of capital with 4% terminal growth over a 5-year stage.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.29σ |
| cohort percentile (of 45 peers) | 4 |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 0.74x | 5 | justifies |
| Earnings | 0.37x | 4 | justifies |
| Relative | 0.37x | 5 | justifies |
| Growth | 0.80x | 4 | justifies |
Families that justify the price: Asset, Earnings, Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.5%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $74.49 | 0.46x | yes | FCF base $4.0B, growth -10% (input: historical growth), terminal g 0.5%, WACC 9.5%, 5yr projection |
| DCF Exit Multiple | Growth | $55.99 | 0.62x | yes | Exit EV/EBITDA: 4.0x / 2.2x / 7.2x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $56.33 | 0.61x | yes | P/E 10x (static sector reference · 2026-04), scenarios: 7.5x / 10.0x / 12.0x (bear / base = reference held flat / bull), EV/EBITDA 4.49x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | $35.26 | 0.98x | yes | Stage 1: 20% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $46.82 | 0.74x | yes | BV/sh $20.90, ROE (TTM) 20.7%, ke 9.3% |
| Two-Stage Excess Return | Asset | $69.46 | 0.50x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $11.16 | 3.09x | yes | Rev $9.2B, growth -15% (input: historical growth; tapered), Terminal P/S: 1.0x / 1.3x / 1.6x (bear / base = today's held flat / bull, cap 6x) |
| Peter Lynch Fair Value | Relative | $150.15 | 0.23x | yes | EPS $4.29, growth 35% (input: historical EPS growth), PEG=0.23 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $75.45 | 0.46x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $3.96B × (1−21%) / WACC 9.5% → EPV (no growth) |
| Residual Income | Asset | $66.48 | 0.52x | yes | BV $20.90 + 5yr PV of (ROE (TTM) 20.7% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $44.91 | 0.77x | yes | √(22.5 × EPS $4.29 × BVPS $20.90) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $93.17 | 0.37x | yes | EBITDA $5.49B × sector EV/EBITDA 6.0x |
| FCF Yield | Earnings | $122.35 | 0.28x | yes | FCF $4003.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $138.42 | 0.25x | yes | EPS $4.29 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $24.90 | 1.39x | yes | BV $20.90 × (ROIC 11.3% / WACC 9.5%) |
| P/Sales Sector | Relative | $31.33 | 1.10x | yes | Revenue $9.24B × sector P/S 1.2x |
| PEG Fair Value | Relative | $160.88 | 0.21x | yes | EPS $4.29 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $46.38 | 0.74x | yes | EPS $4.29 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $4.1b |
| Net debt / NOPAT (after-tax) | 1.52x |
| Net debt / operating income (pre-tax) | 1.20x |
| Interest coverage | 10.7x |
| Share count CAGR (dilution) | 0.5% |
| Burning cash | no |
Bullet Takeaways
- APA is an oil-weighted producer where crude is about 65% of revenue, anchored by a low-cost Permian position and an Egypt concession that together fund the dividend and the debt paydown out of current cash flow.
- The defining risk is the commodity itself: at roughly 6 times operating income the market is treating today's earnings as a cyclical peak rather than a durable base, and a lower oil price takes the free cash flow with it.
- Watch the balance sheet and Suriname; APA repaid $634 million of near-term bonds in the first quarter of 2026, and the Block 58 development is the long-dated production source that has to convert from cost to cash.
Bull Case
The bull case for APA rests on a structural advantage that does not show up in the headline multiple: the Egypt concession is a profit engine that behaves differently from a standard Permian barrel. Under the production-sharing arrangement, the 10-K explains that income taxes owed to Egypt "are paid by EGPC on behalf of the Contractor out of EGPC's production entitlement" and then "recognized as oil and gas sales revenue and income tax expense." That mechanism grosses up reported revenue and tax in tandem, but the cash economics are a long-lived, low-decline foreign asset that few of APA's pure-Permian peers can replicate. The result is a 35.5% trailing operating margin on a business the market is pricing as if it were a stranded asset.
The capital story is where the recent quarter changes the picture. APA generated $477 million of free cash flow in the first quarter of 2026 and used it to repay $634 million of near-term bond maturities, which the company says will cut 2026 interest expense by more than $60 million. U.S. oil production averaged 124,000 barrels a day, above prior guidance, and the company raised its full-year U.S. oil outlook to 122,000 barrels a day on Permian efficiency gains. This is a producer deleveraging and lifting volumes at the same time, which is the combination that resets a cyclical balance sheet from defense to offense.
Then there is the optionality the market is paying nothing for. Suriname is not yet a reported segment; the 10-K notes that its results are folded into the corporate line because the segment "has not met the quantitative thresholds to be separately reported." That is precisely the kind of asset a trailing-multiple lens cannot value: a sanctioned offshore development that contributes operating expense today and production later. Against an oil and gas cohort that includes EOG, Coterra, and Chord, APA trades at the value end, and the bull case is that the combination of the Egypt cash engine, a lower-cost Permian, and a non-zero Suriname is worth more than six times one year of operating income.
Bear Case
The bear case starts with the capital structure, because in a commodity producer that is where the cycle does its damage. APA carries about $4.1 billion of net debt against $3.3 billion of trailing operating income, roughly 1.3 times, and the debt stack in the 10-K runs out to genuinely long-dated paper, including "7.625% debentures due 2096." Interest coverage near 11 times looks comfortable, but that comfort is a function of today's oil price. The leverage ratio is measured against peak-cycle operating income; price the same debt against a mid-cycle or trough oil environment and the coverage compresses fast. The bear's whole point is that the denominator in those ratios is not stable.
That feeds directly into the earnings-durability question. The market is paying about 6 times operating income, a multiple low enough that the price sits below what even a 5%-a-year decline in operating profit would warrant. Read one way that is cheap. Read the way a commodity desk reads it, the low multiple is the market's verdict that 35.5% margins and current cash flow are a peak, not a run-rate. Oil at 65% of revenue means the entire thesis is a price-of-crude bet wearing an operating story, and the bear does not need APA to do anything wrong; it needs Brent to fade. Egypt adds its own twist: the company already lowered Egypt production guidance to account for production-sharing-contract impacts at higher commodity prices, the structural feature where APA's entitlement barrels shrink as prices rise, capping the upside the bull is counting on.
The competitive position is real but not a moat against the commodity. APA is a price-taker selling an undifferentiated product into a global market, competing for capital against larger, lower-cost peers in the same cohort. Suriname is optionality, but it is also years of spending before it is cash, and offshore developments carry execution and timing risk that a Permian tie-in does not. The honest bear framing is not that APA is overvalued on today's numbers; it is that today's numbers are the good part of the cycle, the balance sheet still carries meaningful debt into the bad part, and the cheap multiple is the market pricing that risk rather than missing it.
Valuation
The unusual thing about APA is that the price is not betting on growth at all; it is betting against decline. Inverted, today's price sits below what even a 5%-a-year fall in operating profit would warrant, which is to say the market has priced a shrinking business. That is the cyclical-value setup in a sentence: a 35.5% operating margin and current free cash flow that the market refuses to capitalize at anything close to a normal multiple, because it does not believe the margin is the steady state.
The methods agree to an unusual degree, and they all point the same way. Every family of valuation method lands above the price: the earnings-power and peer-multiple lenses by the widest margin, reading the price at roughly a third of where they sit, and the asset-value and forward-growth lenses closer but still above. When all four families say a stock is cheap, the disagreement is not among the methods; it is between the methods and the market. The methods value trailing cash flow and reserves; the market is discounting all of it for commodity risk and for the chance that the cycle turns. There is no premium to explain here, only a discount, and the question the valuation poses is whether that discount is the market being prudent about oil or being too pessimistic about a producer that is deleveraging.
Solvency is the load-bearing variable and cuts both ways. Net debt of about $4.1 billion is 1.3 times trailing operating income and 1.6 times after-tax operating profit, with interest coverage near 11 times, all of it healthy at today's strip. The first-quarter bond repayment of $634 million is the company actively reducing that exposure, and the share count has been essentially flat. The downside is not a balance-sheet break at current prices; it is what those same ratios look like if oil fades and the operating-income denominator drops. The peer cohort frames it: against EOG, Coterra, Chord, and the rest of the oil and gas group, APA sits at the value end on price-to-cash-flow, carrying both the Egypt cash engine and the unvalued Suriname optionality that a trailing multiple cannot see.
Catalysts
The first-quarter 2026 print was the catalyst that defined the current setup. APA reported EPS of $1.38 against a $1.08 consensus on revenue of $2.3 billion, beating on both lines. The drivers were operational: U.S. oil production of 124,000 barrels a day came in above guidance on Permian efficiency and uptime, and the company raised its full-year U.S. oil outlook to 122,000 barrels a day. Despite the beat, the stock dipped, a reminder that the market is trading the commodity tape more than the quarter.
The balance-sheet actions are the more durable signal. APA generated $477 million of free cash flow and repaid $634 million of near-term bond maturities, work it expects to lower 2026 interest expense by more than $60 million. For a producer the market is pricing on cyclical risk, a quarter spent retiring debt and lifting volumes is the most direct way to shift the risk profile, and it is the kind of catalyst that compounds quietly across prints rather than spiking on a single day.
The offsetting development is Egypt. The company lowered its Egypt adjusted production guidance to reflect production-sharing-contract impacts at higher commodity prices, the entitlement mechanism that trims APA's reported Egypt barrels when prices rise. The forward watch items are the trajectory of that Egypt guidance and the pace of the Suriname development, the long-dated source of new production that has to move from spending to cash flow for the optionality in the price to become earnings.
Peer Cohorts (Per Segment, With Filing Citations)
North Sea (reported)
- EOG (EOG RESOURCES, INC.)
- (no filing in the citation store)
- CHRD (Chord Energy Corp)
- (no filing in the citation store)
- CTRA (COTERRA ENERGY INC.)
- (no filing in the citation store)
- AR (ANTERO RESOURCES CORPORATION)
- (no filing in the citation store)
- RRC (RANGE RESOURCES CORPORATION)
- (no filing in the citation store)
- PR (PERMIAN RESOURCES CORPORATION)
- (no filing in the citation store)
- SM (SM ENERGY CO)
- (no filing in the citation store)
- CRGY (Crescent Energy Company)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
APA Q1 2026 results, May 2026 · APA Q1 2026 earnings, May 2026