It hasn't been a great evening session for BP p.l.c. investors, who have watched their shares sink by -1.1% to a price of $34.76. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.
BP p.l.c. Is Fairly Priced to Earnings but Overpriced Compared to Its Book Value:
BP p.l.c. provides carbon products and services. The company operates through Gas & Low Carbon Energy, Oil Production & Operations, and Customers & Products segments. The company belongs to the Energy sector, which has an average price to earnings (P/E) ratio of 8.53 and an average price to book (P/B) ratio of 1.78. In contrast, BP p.l.c. has a trailing 12 month P/E ratio of 4.2 and a P/B ratio of 8.26.
When we divide BP p.l.c.'s P/E ratio by its expected EPS growth rate of the next five years, we obtain its PEG ratio of -0.41. Since it's negative, the company has negative growth expectations, and most investors will probably avoid the stock unless it has an exceptionally low P/E and P/B ratio.
Negative Cash Flows With a Flat Trend:
| 2015 | 2016 | |
|---|---|---|
| Revenue (MM) | $225,982 | $225,982 |
| Revenue Growth | n/a | 0.0% |
| Operating Margins | -4% | 0% |
| Net Margins | -3% | 0% |
| Net Income (MM) | -$6,400 | $172 |
| Net Interest Expense (MM) | $1,065 | $1,221 |
| Depreciation & Amort. (MM) | $15,219 | $15,219 |
| Free Cash Flow (MM) | -$947 | -$2,071 |
| Capital Expenditures (MM) | $20,080 | $21,204 |
BP p.l.c. has consistently negative margins with a positive growth rate, negative expected EPS Growth, and a highly leveraged balance sheet. BP p.l.c. has weak revenue growth and a flat capital expenditure trend.
