01. APA Corporation (NASDAQ:APA)
Forward P/E ratio as of October 2: 2.81
Number of Hedge Fund Holders: 31
APA Corporation (NASDAQ:APA) is a prominent independent energy company, specializing in the exploration, development, and production of natural gas, crude oil, and natural gas liquids. With operations spanning the United States, Egypt, and the North Sea, APA Corporation (NASDAQ:APA) also has exploration projects in Suriname and Uruguay. As of October 2, APA Corporation (NASDAQ:APA) stock features an attractive Forward P/E ratio of 2.81, making it a solid inclusion in the list of mid-cap stocks with low P/E ratios. The company’s strong fundamentals, coupled with its solid global presence, make it an appealing investment option.
For Q2 2024, APA Corporation (NASDAQ:APA) reported consolidated net income of $541 million, or $1.46 per diluted share, under Generally Accepted Accounting Principles (GAAP). Excluding non-core items, such as a $216 million after-tax gain on divestitures and $98 million in transaction costs related to the recent Callon Petroleum acquisition, APA Corporation (NASDAQ:APA) adjusted net income stood at $434 million, or $1.17 per share. The company also generated $200 million in free cash flow during the first half of 2024, demonstrating its strong financial health and operational efficiency.
The integration of Callon Petroleum has proven successful, with APA Corporation (NASDAQ:APA) increasing its estimate of annual cost synergies from $225 million to $250 million. These synergies are being realized through reduced overhead, improved cost of capital, and enhanced operational efficiencies. The combined company is expected to benefit significantly from cost reductions and enhanced capital efficiency in its Permian Basin operations, potentially adding $300 million in annual cash flow for every $5 change in oil price per barrel.
In terms of production, APA Corporation (NASDAQ:APA) exceeded expectations in all three of its main operational areas. U.S. oil production rose 67% compared to the first quarter, primarily due to the integration of Callon assets. Furthermore, the company anticipates strong organic production growth in the second half of the year, projecting a fourth-quarter U.S. oil output of 150,000 barrels per day, which reflects an 8% increase over the second quarter.
The number of hedge funds holding APA Corporation (NASDAQ:APA) shares declined to 31 in Q2 2024, down from 45 in the previous quarter, suggesting potential undervaluation. Given the stock’s low forward P/E ratio, strong cash flow generation, and successful acquisition integration, APA Corporation presents an enticing opportunity for investors looking for a mid-cap energy stock with robust fundamentals.
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