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Anadarko Petroleum’s Stock Reaction after 3Q17 Earnings

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Anadarko’s stock performance

After Anadarko Petroleum’s (APC) after-market 3Q17 earnings release on October 31, 2017, APC stock fell ~0.12% in pre-market trading on November 1, 2017. The stock has fallen ~30% YoY (year-over-year).

As you can see in the chart below, Anadarko’s performance has been mainly driven by crude oil prices (UCO). Crude oil and natural gas prices (UNG) have also been driving the Energy Select Sector SPDR ETF (XLE).

XLE has fallen ~11% since the beginning of the year, while natural gas prices have fallen ~13% in the same period. Crude oil prices have risen ~4% since the beginning of the year.

As we can see in the chart, both XLE and Anadarko Petroleum have underperformed the SPDR S&P 500 ETF (SPY), which has risen ~14% YTD (year-to-date). The energy sector makes up ~6.0% of SPY.

The fall of Anadarko stock on November 1, 2017, before the market opened is likely the result of the company’s worse-than-expected earnings for 3Q17 reported the previous day after the markets closed. To know more about Anadarko’s 3Q17 performance, read Part 1 of this series.

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Key 3Q17 highlights and management commentary

In late September 2017, APC announced a $2.5 billion share repurchase program. It said in a press release that at its current share price, that represents ~10% of the company’s outstanding common shares. It also said the company would initially target share repurchases of $1 billion before the end of 2017. APC stock rose 8% the day after the announcement.

In a September 20, 2017, press release, Al Walker, Anadarko’s CEO (chief executive officer), said, “We believe this is a very attractive use of our cash given the value of our assets and the highly accretive nature of this program.”

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