BP Earnings Beat Expectations Why the Stock Is Falling. Leave a comment

The Value Scorecard identifies the stocks most likely to outperform based on its valuation metrics. This list of both classic and unconventional valuation items helps separate which stocks are overvalued, https://investmentsanalysis.info/ rightly lowly valued, and temporarily undervalued which are poised to move higher. The ever popular one-page Snapshot reports are generated for virtually every single Zacks Ranked stock.

Some of the items you’ll see in this category might look very familiar, while other items might be quite new to some. The industry with the best average Zacks Rank would be considered the top industry (1 out of 265), which would place it in the top 1% of Zacks Ranked Industries. The industry with the worst average Zacks Rank (265 out of 265) would place in the bottom 1%.

BP Stock Exposure & Sources of Concentration

BP’s financials for Q did offer investors some hope, as the company eked out a US$86 million profit after a US$16.8 billion loss in the second quarter. BP CEO Bernard Looney told investors at the time that their dividend remained safe. As of December 31, 2020, shares of BP were trading at US$20.52 on the NYSE. The Deepwater Horizon oil spill in 2010 led to another sharp decline in share price, with the stock shedding roughly 50 per cent of its value in 50 days. In early 2011, the BP stock price reached a post-spill high of $49.50. Formerly known as British Petroleum, BP plc is a world-renowned multinational oil and gas company.

• By October 2020, the country’s output remained around 10 percent below its 2019 level.
• So it’s a good idea to compare a stock’s debt to equity ratio to its industry to see how it stacks up to its peers first.
• The world is a complex place and, sometimes, you have to change direction if you want to succeed.
• BP p.l.c. currently operates through 4 segments including Gas & Low Carbon Energy, Oil Production & Operations, Customers & Products, and Rosneft segments.
• ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating indiv idual securities.
• So why are some BP employees concentrated in BP stock and others are not?

A strong cash flow is important for covering interest payments, particularly for highly leveraged companies. Growth traders and investors will tend to look for growth rates of 20% or higher. That does not mean that all companies with large growth rates will have a favorable Growth Score. But, typically, an aggressive growth trader will be interested in the higher growth rates. The Price to Cash Flow ratio or P/CF is price divided by its cash flow per share. It’s another great way to determine whether a company is undervalued or overvalued with the denominator being cash flow.

BP, Occidental Petroleum Fall Despite Steady Oil Prices

One of the major reasons eToro is our highest-rated brokerage is because of its social trading community. Over the past 12 months, insiders at BP have not bought or sold any shares. This was slower than the Oil & Gas Integrated industry average of 10.91%. Oswald Clint, a top 40% analyst from Bernstein maintains BP with a buy rating and raises their BP price target from $48.00 to $53.00, on Feb 8, 2023. Justin Jenkins, a top 1% analyst from Raymond James maintains BP with a buy rating and lowers their BP price target from $48.00 to $47.00, on May 3, 2023.

The first wave of the virus caused oil demand to fall to the lowest point in 25 years before producers reined in their production to protect the oil market price. But further market interventions will https://forexhistory.info/ be more difficult due to the “uncertain” timescale of the oil market’s “fragile recovery”, according to the IEA. But the oil price rally may not enough to encourage more investment in new production.

Is BP stock properly valued?

Its gas business includes regions with upstream activities that predominantly produce natural gas, integrated gas and power, and gas trading. Its low carbon business includes solar, offshore and onshore wind, hydrogen and CCS, power trading, and its share in bp Bunge Bioenergia. Its oil production & operations segment comprises regions with upstream activities that predominantly produce crude oil, including bpx energy. The customers & products segment comprises its customer-focused businesses, which include convenience and retail fuels, electric vehicle charging, as well as Castrol, aviation and business-to-business and midstream. It also includes its products businesses, refining & oil trading, as well as its bioenergy businesses. Instead of BP and Exxon Mobil, I recently invested more of my capital into midstream companies, like this one, which offers investors a more predictable cash flow picture and a safer dividend.

When BP released fourth-quarter 2022 earnings, which were nothing short of spectacular, it also released a corporate strategy update. The strategy update was a separate document, however, and was only referenced within the earnings update. It might have been the more interesting of the two documents, given that strong quarterly results were virtually locked in because of elevated energy prices. BP said it expects oil and European gas prices to remain strong in the second quarter even as refining profit margins are expected to weaken due to lower diesel prices. The lower share buyback “will more than offset the good operational performance as BP is the first international oil company…to cut buybacks this quarter,” Jefferies analysts said in a note. BP stock retreated Tuesday after the oil major reported a first-quarter profit that was lower than a year ago and slowed the pace of its share buyback program.

BP’s Q2 Earnings Exceed Expectations; Declares Dividend Hike & Buybacks

Meanwhile, Bank of America (BAC) financed more clean energy projects ($35.8 billion vs. $32 billion). Morgan Stanley (MS) invested 8% more money in fossil fuel activity compared to low carbon businesses. Reportedly, BP will narrow its focus within green energy projects and try to reassure investors who are concerned that the company has spread itself too thin. BP’s https://forexbox.info/ earnings report this week may shed some light on a potential strategic shift. Any hint at a greater focus on the dividend or repurchase program could jumpstart shares going forward. Meanwhile, BP’s green energy plans could prove to be “expensive” and “a bit of a money pit” in the short term, according to analysts at the investment firm Hargreaves Lansdown.

“Even the reduced dividend is more than the group can really afford and until the oil price recovers it’s going to bleed cash. While there are some cost saving levers to pull, management really have little option but to batten down the hatches and weather the storm,” Hargreaves said. “At its core, BP’s investment case is a de-leveraging story, the pace at which is determined by commodity prices,” Borkhataria said. Bernstein analyst Oswald Clint said that while BP’s business plan for 2021 through 2025 does highlight attractive growth and returns, the proof will be in the actual figures.

Can I get consistent income from BP stock?

The company’s merger with Amoco saw the stock soaring 40 per cent by April 1999. However, it then plunged almost 25 per cent by early 2000, when the Federal Trade Commission expressed opposition to BP-Amoco’s acquisition of ARCO. Once the acquisition was approved in April 2000, the share price skyrocketed to hit $57 in June 2000.

There is an opportunity to recover for someone with 15 to 20 more years left in their career, but for someone closer to retirement, there may not be. A recent study by the Employee Benefits Research Institute and the Investment Company Institute found that over 50% of employees whose 401(k) plans include company stock as an investment option choose to invest in it. Investors of record on Friday, May 12th will be given a dividend of $0.3966 per share on Friday, June 23rd. The West’s largest fossil fuel companies are expected to have raked in combined profits of almost $200 billion for the year, according to Refinitiv data.

Saudi Aramco: ESG Vs. More Oil

It’s important to discuss your long-term strategy with a financial professional to discern if there’s any benefit to holding the stock. The BP stock grant plans wholly vest stock annually into participant accounts for Level F and above. BP also requires some higher-level employees to hold a certain amount of stock for a specified time.

The company also provides de-carbonization solutions and services, such as hydrogen and carbon capture and storage, as part of its green agenda. The once British Petroleum is now “Beyond Petroleum” and focused on a major shift in its business. The company is working hard to move away from non-renewable carbon-based energy and into biofuels, solar, and wind. The company hopes to be net-zero in regard to carbon emissions and production by 2050 or earlier and is well on the way to doing so. Among the many avenues of advance are the build-out of solar and wind farms as well as the expansion of a major EV charging network.

The immense profits that carbon fuels can produce during the industry’s cyclical upturns are very hard to resist, so I understand why the company is trying to cash in while it can. The world is a complex place and, sometimes, you have to change direction if you want to succeed. Fair enough, but when it comes to a $100 billion market cap integrated global energy giant like BP (BP 0.92%), big directional changes shouldn’t be a common occurrence. But, here we are again, with BP announcing a new business direction as it released fourth-quarter 2022 earnings. Benchmark Brent crude oil prices averaged $81 per barrel in the first three months of the year, down 16% from a year earlier and 7% from the fourth-quarter. A report from the global energy watchdog, published on Wednesday, found that the second wave of the coronavirus pandemic has already weighed on global market prices, causing the price of oil futures contracts to slip.

BP took $17 billion in write-downs on the value of its oil and gas fields, figuring they were no longer worth the sums on the company’s books. In the wake of the Horizon oil platform disaster, BP stock plummeted significantly, impacting the 401(k) accounts of BP employees. If we look at a more recent instance, the drop in energy demand at the beginning of the COVID epidemic eroded BP’s share price by more than half. At the same time, BP’s reorganization put many job positions at risk, which indicates the augmented financial risk in BP’s company stock for employees. The 1 week price change reflects the collective buying and selling sentiment over the short-term. A strong weekly advance (especially when accompanied by increased volume) is a sought after metric for putting potential momentum stocks onto one’s radar.