Energy giant Anadarko Petroleum (APC) reported earnings after the bell Monday. The report was strong across the board as the company once again beat earnings estimates and also topped the revenue consensus as well. I would look for this underappreciated, fast growing E&P concern to move up on Tuesday and post more gains in the weeks ahead.
Key highlights from APC's earnings report:
- EPS came in at $1.08, 14 cents above consensus.
- Revenue came in just under $3.9B, more than $400mm over expectations.
- The company provided 2013 sales volume guidance to 279M-287M BOE (Barrels of Oil Equilavent), up from its previous view for 279M-285M BOE.
- Sales volumes grew 793K BOE/day from 704K BOE/day in the year ago period. This marks an impressive 13% increase Y/Y.
Anadarko Petroleum Corporation is a $55B market capitalization integrated energy giant. It produces and distributes gas and oil from properties worldwide with major assets in the United States, Ghana, Algeria and China. It also recently had two large gas discoveries in Mozambique as well.
Four additional reasons APC has upside from $88 a share:
- The big earnings beat should not have been that big of a surprise. Consensus earnings estimates for both FY2013 and FY2014 had moved up nicely over the last month. The company had also handily beat earnings estimates each of the previous five quarters. The average beat over consensus of those five earnings reports had been north of 20%.
- Analysts expect 11% to 14% annual revenue growth over the next two fiscal years. The stock sports a five projected PEG of 1.
- The company has grown operating cash flow by ~60% over the last two completed fiscal years and the stock sells for just over 5x operating cash flow.
- The 26 analysts that cover the stock have a mean price target of just over $107 a share on APC. Credit Suisse has an "Outperform" on the shares and raised its price target to $109 from $99 in late March.