Financial Performance Of The Most Successful Companies In The Industry
Essay Preview: Financial Performance Of The Most Successful Companies In The Industry
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Apache (ticker: APA) is an independent energy company that explores and produces
natural gas, crude oil, and natural gas liquids. The company has proved reserves of 1.9
billion barrels of oil equivalent mostly from North American regions, such as Gulf of
Mexico, the Gulf Coast of Texas and Louisiana, the Permian Basin in West Texas, the
Anadarko Basin in Oklahoma, and western Canada.
In 2004, Apache acquired more than two dozen mature US and Canadian fields from
Exxon Mobil for $347 million and Gulf of Mexico properties from Anadarko Petroleum
for $525 million (www.apachecorp.com). The table below shows the financial wealth being of the company.
Performance more
Growth of $10,000
08-19-05
Total Return%
Stock
+/- Industry
+/- S&P 500
Key Stats
Last Close (08-19-05)
$68.80
Market Cap $Mil
22,120
Sales $Mil
5,845
Morningstar Style Box
Large Core
Industry
Oil & Gas
Sector
Energy
Stock Type
Hard Assets
Morningstar Stock Grades
Growth
Profitability
Financial Health
Key Financial Ratios:
Financial Ratio
2002
P/E ratio
15.1
Debt/equity
32.0%
36.0%
45.0%
22.89%
19.85%
5.91%
78.3%
75.1%
72.9%
Yield
25.40%
50.40%
15.10%
This stock has seen steadily growing revenue and remarkable earnings growth over the past three years. Apaches stock has done better than most of its peers in the oil/gas industry. Apaches revenues have grown very rapidly over the past three years.
Like its peer, Apaches earnings per share have grown at a very high rate over the past three years. Also, this stocks sustainable growth rate is quite a bit less than the rate at which its earnings per share have grown. This stock has generated market-line returns over the past 10 years, but has done better than average in the past five years. This stock has had mixed success.
Apache was picked because:
Apaches recorded revenues of $4,190.3 million during the fiscal year ended December 2003, with an increase of 63.7% over 2002. The reason for the increase was due to strong crude oil, and natural gas prices and the companys high production. Net profit was $1121.9 million for the fiscal year 2003, with an increase of 102.4% over 2002. Operating profit during fiscal year 2003 was recorded at $1922.3 million, with an increase of 114% over fiscal year 2002.
The companys strength is in strong operating performance, core North American assets, and strong reserve replacement rate. The weaknesses of the companys are in poor Argentinean operations, low free cash flow, and low utilization in China. Future opportunities are focus on OPECs backing, rising demand for natural gas, and entry into international markets. The threats of the companys are fluctuation in commodity prices, environmental regulations, and competition from market-savvy players.
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