Was Anadarko’s Stock Drop Really Due to Negative Reaction to 2Q Earnings?



Anadarko’s stock performance

After Anadarko Petroleum’s (APC) 2Q16 earnings release on July 27, APC’s stock fell by 1.7%. The stock has declined significantly during the past year. YoY (year-over-year), APC has fallen by ~23%.

In this part of our series, we’ll analyze Anadarko’s stock performance with respect to movements in the broader industry and the broader market.

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Peer comparison

Meanwhile, Hess (HES) has seen its stock price fall by ~10% YoY, Apache (APA) and Concho Resources (CXO) have seen their stock prices increase by ~16.3% and 20%, respectively, on a YoY basis. These companies account for ~5.3% of the Vanguard Energy ETF (VDE).

As shown in the above graph, APC’s performance has been driven mainly by WTI (West Texas Intermediate) crude oil prices (OIL). Natural gas prices (UNG) have also been driving the broader industry ETF, the Energy Select Sector SPDR ETF (XLE).

From July 13 to July 27, Anadarko’s stock was underperforming the Energy Select Sector SPDR ETF (XLE) and ended up giving lower returns at the end of the period. APC’s stock fell by 4% during this period, while XLE fell by 3%.

Notably, both XLE’s and APC’s stocks underperformed the SPDR S&P 500 ETF (SPY), which increased 0.7% during this period.

APC’s stock fell by ~2% on July 27, despite its better-than-expected earnings. Concurrently, crude oil prices fell by 2.3% on July 27. The drop in APC’s stock may have been due to the drop in crude oil prices, rather than the result of a negative market reaction to the company’s earnings results. (Check out Part 1 of this series for the specifics of Anadarko’s 2Q16 performance.)


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