Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Anadarko Petroleum Corporation (APC): Should You Go Ahead And Buy?

Anadarko Petroleum Corporation (NYSE:APC), with a market cap of approximately $43.9 billion, is a company engaged in the exploration and production of oil and natural gas. It operates in three segments: oil and gas exploration and production, midstream and marketing.

For Q1 2013, Anadarko Petroleum Corporation (NYSE:APC) reported a solid quarter. Excluding one-time items, the company had a profit of $1.08 per share, beating analysts’ expectation of $0.94 per share. Revenue increased to about $3.9 billion, beating the average estimate of approximately $3.5 billion in revenue.

Oil and gas production increased 13% to a record 793,000 barrels of oil equivalent per day. Anadarko Petroleum Corporation (NYSE:APC) also raised the top end of its full-year production forecast to a range of 279 million to 287 million boe (up from 279 million to 285 million boe). Anadarko Petroleum Corporation (NYSE:APC) also improved its financial position and ended Q1 with about $3.7 billion in cash.

Anadarko Petroleum Corporation (NYSE:APC)’s solid Q1 results were achieved with management’s “commitment to accelerate value by increasing production in the company’s core operating areas, selectively monetizing assets and delivering large-scale projections on budget,” as stated by president and CEO Al Walker in a report.

Analysts’ calls and estimates

Analysts, on average, are estimating EPS of $4.13 with revenue of $15.2 billion for 2013, which is 13.4% higher than 2012. With another earnings beat, Anadarko Petroleum Corporation (NYSE:APC) had five consecutive positive earnings surprises in the last five quarters. Analysts have a mean target price of $107.17, suggesting 22.3% upside potential based on the closing price of $87.62 on May 6.

Fundamentally, Anadarko’s key stats will be compared to its peers in the industry of oil & gas exploration and production, including Apache Corporation (NYSE:APA and Devon Energy Corp (NYSE:DVN).

Anadarko Apache Devon Energy Industry Average
Market Cap $43.9billion $29.8 billion $23.7 billion N/A
P/E 18.3 15.3 -12.2 N/A
Revenue Growth (3 Year Average) 14.2 25.6 5.8 -2.8
Net Margin, %, ttm 17.8% 11.3% -21.6% 13.1%
ROE 12.4 6.7 -9.3 8.7
ROA 4.6 3.4 -4.6 3.9
Debt/Equity 0.6 0.4 0.4 0.5

Source: Morningstar

Apache Corporation (NYSE:APA), an independent energy company, has a balanced portfolio of onshore and offshore oil and gas properties globally. With a lower than expected Q1, 2013 report, Apache plans to divest $4 billion of assets to pay down debt and repurchase shares (30 million shares). However, Apache has the highest revenue growth (three year average) among these three companies.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.