As of May 22, 2025, APA Corp (US)'s estimated intrinsic value ranges from $20.04 to $120.62 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $38.10 | +128.0% |
| Discounted Cash Flow (5Y) | $36.06 | +115.8% |
| Dividend Discount Model (Multi-Stage) | $20.04 | +19.9% |
| Dividend Discount Model (Stable) | $21.57 | +29.1% |
| Earnings Power Value | $120.62 | +621.9% |
Is APA Corp (US) (APA) undervalued or overvalued?
With the current market price at $16.71, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate APA Corp (US)'s intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.35 | 1.46 |
| Cost of equity | 10.1% | 13.0% |
| Cost of debt | 4.8% | 5.6% |
| Tax rate | 20.8% | 27.8% |
| Debt/Equity ratio | 0.95 | 0.95 |
| After-tax WACC | 7.0% | 8.7% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $36 | $18,341M | 69.4% |
| 10-Year Growth | $38 | $19,080M | 49.6% |
| 5-Year EBITDA | $29 | $15,910M | 64.7% |
| 10-Year EBITDA | $35 | $17,952M | 46.4% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $3,789M |
| Discount Rate (WACC) | 8.7% - 7.0% |
| Enterprise Value | $43,748M - $54,102M |
| Net Debt | $5,301M |
| Equity Value | $38,447M - $48,801M |
| Outstanding Shares | 362M |
| Fair Value | $106 - $135 |
| Selected Fair Value | $120.62 |
| Metric | Value |
|---|---|
| Market Capitalization | $6043M |
| Enterprise Value | $11344M |
| Trailing P/E | 5.93 |
| Forward P/E | 6.33 |
| Trailing EV/EBITDA | 3.65 |
| Current Dividend Yield | 578.47% |
| Dividend Growth Rate (5Y) | 30.16% |
| Debt-to-Equity Ratio | 0.95 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $11.43 |
| Discounted Cash Flow (5Y) | 25% | $9.01 |
| Dividend Discount Model (Multi-Stage) | 20% | $4.01 |
| Dividend Discount Model (Stable) | 15% | $3.24 |
| Earnings Power Value | 10% | $12.06 |
| Weighted Average | 100% | $39.75 |
Based on our comprehensive valuation analysis, APA Corp (US)'s weighted average intrinsic value is $39.75, which is approximately 137.9% above the current market price of $16.71.
Key investment considerations:
Given these factors, we believe APA Corp (US) is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.