Is Anadarko Petroleum Corp Fairly Valued?

by Trefis Team
-14.52%
Downside
72.77
Market
62.20
Trefis
APC
Anadarko
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Anadarko Petroleum Corp (NYSE: APC) posted strong improvement in its full-year 2017 results backed by a recovery in commodities prices during the year. The extension of production cuts by Organization of Petroleum and Exporting Countries (OPEC) and Non-OPEC allies would continue to remain beneficial for the company in the upcoming year. Additionally, APC’s focus on the three Ds in its portfolio — the Delaware basin, the DJ Basin, and the deepwater assets in the Gulf of Mexico (GOM) — will drive the value of the firm going forward. We estimate the company’s share price to be fairly valued at $61, close to its current market price.

Our price estimate is based on the assumption of $12.41 bil revenue in FY’18 and an EBITDA margin of ~30%. We expect a P/EBITDA Multiple of 8.89, slightly higher than that for FY’17. Average share count is estimated at 548 mil.

Our revenue estimate of $12.41 bil for 2018 is arrived at by projecting revenues for each individual segment. Expected sales volume for each of the divisions is multiplied by the expected average price to arrive at the segment-wise revenue figures.

Detailed steps to arrive at our price estimate are outlined in our interactive dashboardYou can modify our assumptions to arrive at your own price estimate for the company.

 

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