What Our Analysts Know About BP

BP logged a -0.3% change during today's morning session, and is now trading at a price of $35.61 per share.

BP returned gains of 6.5% last year, with its stock price reaching a high of $41.38 and a low of $25.37. Over the same period, the stock returned a similar cumulative performance to the S&P 500. As of April 2023, the company's 50-day average price was $37.66.

BP provides carbon products and services. The company operates through Gas & Low Carbon Energy, Oil Production & Operations, and Customers & Products segments. Based in London, United Kingdom, the large-cap Energy company has 67,600 full time employees. BP has offered a 0.7% dividend yield over the last 12 months.

The Company's Revenues Are Declining:

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $278,397 $105,944 $157,739 $241,392
Gross Margins 9.9% 9.6% 14.5% 22.8%
Operating Margins 5.6% -0.5% 6.7% 17.0%
Net Margins 1.45% -19.17% 4.8% -1.03%
Net Income (MM) $4,026 -$20,305 $7,565 -$2,487
Net Interest Income -$2,783,000 -$2,485,000 -$2,274,000 -$1,531,000
Depreciation & Amort. -$18,411,000 -$14,889,000 -$14,972,000 -$14,703,000
Earnings Per Share $1.18 -$6.03 $2.24 $8.18
EPS Growth n/a -611.02% 137.15% 265.18%
Diluted Shares (MM) 3,400 3,370 3,377 11,691
Free Cash Flow (MM) $10,352 -$144 $12,725 $28,863
Capital Expenditures (MM) -$15,418 -$12,306 -$10,887 -$12,069
Net Current Assets (MM) -$112,427 -$109,104 -$104,243 -$97,442
Current Ratio 1.12 1.22 1.15 1.09
Long Term Debt (MM) $57,237 $63,305 $55,619 $43,746
Net Debt / EBITDA 1.62 -6.4 1.02 0.65

BP has exceptional EPS growth, low leverage, and generally positive cash flows. However, BP has declining revenues and decreasing reinvestment in the business, slimmer gross margins than its peers, and weak operating margins with a positive growth rate. Finally, we note that BP has just enough current assets to cover current liabilities.

A Very Low P/E Ratio but Trades Above Its Graham Number:

BP has a trailing twelve month P/E ratio of 4.6, compared to an average of 7.54 for the Energy sector. Based on its EPS guidance of $5.81, the company has a forward P/E ratio of 6.5. According to the 37.5% compound average growth rate of BP's historical and projected earnings per share, the company's PEG ratio is 0.12. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 11.0%. On this basis, the company's PEG ratio is 0.42. This suggests that its shares are undervalued. In contrast, BP is likely overvalued compared to the book value of its equity, since its P/B ratio of 5.92 is higher than the sector average of 1.68. The company's shares are currently trading 159.6% above their Graham number. Ultimately, BP's strong cash flows, decent earnings multiple, and healthy debt levels factor towards it being fairly valued, its elevated P/B ratio notwithstanding.

BP Has No Average Rating Visible In Our Data:

The 13 analysts following BP have set target prices ranging from $39.3 to $52.0 per share, for an average of $44.61 with a buy rating. As of April 2023, the company is trading -15.6% away from its average target price, indicating that there is an analyst consensus of strong upside potential.

The largest shareholder is State Street Corporation, whose 1% stake in the company is worth $809,394,303.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.