Anadarko Petroleum (APC) Stock Declines, Apache Rejects Takeover – TheStreet.com

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NEW YORK (TheStreet) — Anadarko Petroleum (APCGet Report) stock is down 3.96% to $65.21 in afternoon trading on Tuesday, after Apache (APA) rejected its takeover offer, sources told Bloomberg. 

The merger would have marked this year’s biggest deal for an independent U.S. oil and natural gas producer, Bloomberg adds. Apache is now working with Goldman Sachs to explore other options.

Apache is worth more than $18 billion, so any potential offer would have to come from one of the biggest energy producers. 

Anadarko is an independent exploration and production company based in The Woodlands, TX.

Separately, TheStreet Ratings team rates ANADARKO PETROLEUM CORP as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

We rate ANADARKO PETROLEUM CORP (APC) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company’s weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow and generally high debt management risk.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 305.6% when compared to the same quarter one year ago, falling from $1,087.00 million to -$2,235.00 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ANADARKO PETROLEUM CORP’s return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ANADARKO PETROLEUM CORP is rather low; currently it is at 23.45%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -100.22% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to $1,127.00 million or 51.48% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm’s growth is significantly lower.
  • The debt-to-equity ratio of 1.13 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, APC’s quick ratio is somewhat strong at 1.02, demonstrating the ability to handle short-term liquidity needs.
  • You can view the full analysis from the report here: APC
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.