DCF Studio

    APA · NMS · Energy

    APA Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 83.33

    Market price

    USD 44.87

    Implied upside

    +85.7%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    AdjustedCapital expenditure runs at 27.8% of revenue against depreciation of 19.7%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.

    Value Per Share

    Perpetuity growth
    USD 83.33+85.7%
    Exit multiple
    USD 37.82-15.7%
    Market price
    USD 44.87

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 8.3bnUSD 7.7bnUSD 7.2bnUSD 6.7bnUSD 6.2bn-7.0%
    EBITUSD 3.1bnUSD 2.9bnUSD 2.7bnUSD 2.5bnUSD 2.3bn-7.0%
    NOPATUSD 2.5bnUSD 2.3bnUSD 2.1bnUSD 2.0bnUSD 1.8bn-7.0%
    Add depreciation & amortisationUSD 1.6bnUSD 1.5bnUSD 1.4bnUSD 1.3bnUSD 1.2bn-7.0%
    Less capital expenditureUSD -2.3bnUSD -2.1bnUSD -2.0bnUSD -1.9bnUSD -1.7bn-7.0%
    Less increase in working capitalUSD 221.9mUSD 206.4mUSD 192.1mUSD 178.7mUSD 166.3m+7.0%
    Free cashflow to firmUSD 2.0bnUSD 1.9bnUSD 1.7bnUSD 1.6bnUSD 1.5bn-7.0%
    Discount factor0.96570.90050.83970.78300.7301-
    Present valueUSD 1.9bnUSD 1.7bnUSD 1.5bnUSD 1.3bnUSD 1.1bn-13.2%
    Present Value Of The ForecastUSD 7.5bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.575Reported 0.366, pulled toward 1.0 (Blume)
    Cost of equity8.16%Risk-free + beta x equity risk premium
    Cost of debt5.17%Interest expense / average total debt
    Market capitalisationUSD 15.7bn77.4% of capital
    Total debtUSD 4.6bn22.6% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC7.24%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 83.33

    78% of EV

    Forecast FCFF, final year
    USD 1.5bn
    Capex at depreciation, working capital in reinvestment
    USD 1.8bn
    Less reinvestment at g/ROIC (8.9% of NOPAT)
    USD -164.2m
    Capitalised
    USD 1.7bn
    ROIC (reported)
    28.1%
    Terminal value, undiscounted
    USD 36.3bn
    Terminal value, discounted
    USD 26.5bn
    Enterprise value
    USD 34.0bn
    Less net debt
    USD 4.1bn
    Equity value
    USD 29.9bn

    Exit at 3.9x EBITDA

    Value per shareUSD 37.82

    58% of EV

    Terminal value, undiscounted
    USD 13.9bn
    Terminal value, discounted
    USD 10.2bn
    Enterprise value
    USD 17.7bn
    Less net debt
    USD 4.1bn
    Equity value
    USD 13.6bn

    Spread between methods: 75%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.24%115.20129.69149.43177.96222.83
    6.24%89.1897.29107.55120.95139.22
    7.24%72.2377.2683.3390.82100.30
    8.24%60.3163.6467.5472.1877.78
    9.24%51.4753.7956.4459.5163.10

    Outlined: this model. Green text: above today's price of 44.87. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year-7.0%-18.5%-11.5pp
    EBIT margin37.5%23.0%-14.5pp
    Discount rate7.2%10.7%+3.5pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.