The U.S. energy firm
) reported weak second-quarter results on August 2, 2012, with both
revenue and earnings per share declining year over year.
APACHE CORP (APA): Free Stock Analysis Report
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We cover below the results of the recent earnings announcement,
subsequent analyst estimate revisions and the Zacks ratings for the
short-term and long-term outlook for the stock.
Second Quarter Recap
The quarter's earnings per share - excluding one-time items - came
in at $2.07, well below the Zacks Consensus Estimate of $2.52 and
the year-ago period adjusted profit of $3.22.
Quarterly revenues of $3,972.0 million were down 8.4% from the
second quarter of 2011 and were also short of our projection of
Agreement of Analysts
Looking at the estimates' revision trend, it becomes clear that
most of the analysts project a pessimistic outlook for Apache
through the balance of 2012.
Of the total 20 analysts covering the stock, 11 have lowered its
estimate and one analyst has moved in the opposite direction over
the last 30 days. In the last 7 days, there was no estimate
For fiscal 2012, 13 analysts (out of 19 covering the stock) have
trimmed their estimates in the last 30 days, while only one analyst
went for an upward revision. The last 7 days saw a complete dearth
of estimate revisions.
The estimate revisions for the upcoming quarter and full-year 2012
indicate that analysts' sentiment were based on not-so-favorable
oil and natural gas environment along with operational
disturbances, inflationary cost conditions and geo-political risks.
However, the company's large geographically-diversified reserve
base, its balanced exposure to natural gas and crude oil, and
multiyear trends in reserve replacement and production growth
factors are expected to partially offset the negative effects.
Magnitude of Estimate Revisions
Reflecting the influence from analysts' earnings revision, in the
last 30 days, the Zacks Consensus Estimate for the third quarter
dropped to $2.23 per share from $2.36. Over the past one week,
earnings estimate remained unchanged.
For the full year, the earnings estimate moved down to $10.15 from
$10.58 per share, over the last 30 days. A week before, the
estimate recorded was $10.15.
With respect to earnings surprise, Apache showed mixed trend in the
last 4 quarters. The company recorded a minimum surprise of
negative 17.9% in the second quarter of 2012 to the maximum of
positive 4.6% in the third quarter of 2011. On average, the
earnings surprise was a negative 3.4%.
We are maintaining our Neutral recommendation on the stock, as we
see limited upside over the near term. Apache - which completed the
Exxon Mobil Corporation'
) Beryl Field, together with other properties in the U.K. North Sea
earlier this year - currently retains a Zacks #3 Rank (short-term
About Earnings Estimate Scorecard
As a PhD from MIT, Len Zacks proved over 30 years ago that earnings
estimate revisions are the most powerful force impacting stock
prices. He turned this ground breaking discovery into two of the
most celebrating stock rating systems in use today. The Zacks Rank
for stock trading in a 1 to 3 month time horizon and the Zacks
Recommendation for long-term investing (6+ months). These "Earnings
Estimate Scorecard" articles help analyze the important aspects of
estimate revisions for each stock after their quarterly earnings
announcements. Learn more about earnings estimates and our proven
stock ratings at http://www.zacks.com/education/