uploads///peers

Where Apache’s Relative Valuation Stands next to Peers

By

Nov. 23 2017, Updated 9:00 a.m. ET

Apache’s EV-to-EBITDA multiple

Apache’s (APA) forward EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple is 6.3x. By comparison, Concho Resources (CXO) is currently trading at a higher forward EV-to-EBITDA multiple of ~11.3x.

Cimarex Energy (XEC), Continental Resources (CLR), and Devon Energy (DVN) are all trading at slightly lower multiples of ~8.9x, ~8.6x, and ~8.4x, respectively.

As you can see from the above chart, Apache seems to be undervalued next to its peers’ average of ~8.7x.

Article continues below advertisement

Return on equity

Apache’s returns, when profitability is scaled by shareholder equity, were decent compared to its peers. This calculation is referred to as ROE (return on equity), and Apache’s ROE stands at ~10%. Among Apache’s peers, Continental Resources has the worst ROE of about -0.6%.

Debt-to-asset ratio

As you can see from the chart, Apache has the second-highest debt-to-asset ratio of ~39% among its peers.

The debt-to-asset ratio is used to measure a company’s leverage. A higher percentage means that a higher proportion of a company’s assets are financed through debt. The higher the ratio, the higher the financial risk. Continental Resources’ debt-to-asset ratio is the highest among peers at 47%.

Advertisement

More From Market Realist

    • CONNECT with Market Realist
    • Link to Facebook
    • Link to Twitter
    • Link to Instagram
    • Link to Email Subscribe
    Market Realist Logo
    Do Not Sell My Personal Information

    © Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.