BP shares drop to 25-year low a week after unveiling climate strategy News for the Energy Sector

The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades. In summary, BP offers excellent long-term total cash returns and is a very worthwhile purchase. BP is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.

An oil well requires continual investment to maintain production, and sooner or later, the well will run dry. BP and its peers are always looking for new prospects and this costs huge amounts of money. According to analysts, BP’s stock has a predicted upside of 19.39% based on their 12-month price targets. Enter your email address below to receive the latest headlines and analysts’ recommendations for your stocks with our free daily email newsletter.

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On the other hand, the S&P 500 has only moved 5.91% and -6.35%, respectively. Below, we take a look at BP (BP), a company that currently holds a Momentum Style Score of B. We also talk about price change and earnings estimate revisions, two of the main aspects of the Momentum Style Score. Below, we take a look at BP (BP), a company that currently holds a Momentum Style Score of A. Momentum investing revolves around the idea of following a stock’s recent trend in either direction.

For example, value investors will want to focus on the “Value” category. Stocks with high Zacks Ranks and “A” grades for Value will be some of the highest-quality value stocks on the market today. BP’s stock closed in London on Thursday at 232.4 pence, the lowest level since October 1995. While falling crude prices and fears of the second wave of the coronavirus didn’t help, the slide suggests shareholders weren’t convinced by Looney’s pitch. Looney’s departure, first reported by the Financial Times, marks a changing of the guard at Britain’s two largest energy companies. At the time, BP did not find any breach of the company’s code of conduct.

In terms of revenue, it ranks 4th on the list and the company is vertically integrated as well with operations in all segments of the oil and gas sector. Operations are currently underway in 80 countries around the world, the company can produce asset beta and equity beta 3.7 million barrels of oil equivalents per day, and it lays claim to nearly 20 billion barrels in proven reserves. On the retail end of the business, the company operates more than 18,700 fuel stations and its largest segment is in the US.

Please note that estimate revision trends remain at the core of Zacks Rank as well. A nice path here can help show promise, and we have recently been seeing that with BP. BP trades at less than four times forward adjusted earnings, even after strong price action in recent months. In doing so, it has handily outperformed the FTSE 100 by 19 percentage points. On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits.

The BP share price

Sign-up to receive the latest news and ratings for BP and its competitors with MarketBeat’s FREE daily newsletter. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns. Shell also has a P/B ratio of 0.99 compared to its industry’s price-to-book ratio of 1.53. Over the past year, its P/B ratio has been as high as 1.31, as low as 0.91, with a median of 1.07. SHEL’s price-to-earnings ratio has been as high as 9.46 and as low as 4.40, with a median of 6.47, while its PEG ratio has been as high as 2.37 and as low as 0.48, with a median of 0.82, all within the past year.

So, this very low P/E ratio, even remembering earnings are cyclical, is just too low. In addition, it produces and refines oil and gas for its downstream operations as well as invests in upstream, downstream, and alternative energy companies including advanced mobility. Advanced mobility is the future of transportation and includes technologies like EV, hybrid, and hydrogen https://1investing.in/ fuel cells. To that end, the company is building 7 hydrogen production and storage hubs in key locations around the world. The company aims to produce blue and green hydrogen for the global transportation industry with production beginning in 2027. Blue hydrogen is hydrogen captured from the company’s natural gas deposits using a process that captures the waste carbon.

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That means these capital returns are highly likely to be realized. This metric is found by dividing a stock’s price with the company’s revenue. Some people prefer this metric because sales are harder to manipulate on an income statement.

On the other hand, the S&P 500 has only moved 2.45% and 23.1%, respectively. BP’s strong cash flow is giving it dry powder to speed up its net-zero carbon pace and align itself with strong ESG credentials. It’s cash conversion ratio (at December 2021 year-end) of 131% is also helping.

Has reported on politics, economics, migration, nuclear diplomacy and business from Cairo, Vienna and elsewhere. Fuel demand in Europe has been “a little bit” soft while consumption in China has been strong following the lifting of pandemic restrictions, BP Chief Financial Officer Murray Auchincloss told analysts on a call. Its dividend remained unchanged at 6.61 cents per share after a 10% increase in February.

BP’s New Interim CEO Plans to Stick to Energy Transition

The network totaled more than 9,000 stations around the middle of 2022 and expansion was ramping in order to meet the goal of 100,000 EV stations before 2050. 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. BP will still exceed its goal of using 60% of surplus cash to buy its own shares, but investors were disappointed and its forecast for lower oil and gas production in the second quarter also weighed on investor sentiment. The impact of the pandemic on BP was evident in the results of the oil major in the second quarter. The price of Brent averaged $30 in the quarter, much lower than the average of $50 in the first quarter and $64 in the full-year 2019.

His remuneration included a salary of £1.4m, a bonus of £2.4m – down fractionally on 2021 – and a £6m share award, as well as benefits. This meant that the total package was 120% more than the £4.5m he received in 2021. The company and an external legal team reviewed the claims, prompting Looney to disclose “a small number of historical relationships with colleagues prior to becoming CEO”. One share of BP stock can currently be purchased for approximately $38.10. Below you’ll find our previous coverage of BP stock where you can track our view over time.

That’s not as high as the double-digit returns oil developments can sometimes bring in, but greater than many clean-energy projects. 12 equities research analysts have issued 12 month target prices for BP’s shares. On average, they predict the company’s share price to reach $41.58 in the next twelve months. This suggests a possible upside of 9.1% from the stock’s current price. View analysts price targets for BP or view top-rated stocks among Wall Street analysts. The stock of BP has collapsed near its 25-year lows for various reasons.

Shares are looking quite well from a longer time frame too, as the monthly price change of 3.78% compares favorably with the industry’s 2.32% performance as well. It’s also important to note that Style Scores work as a complement to the Zacks Rank, our stock rating system that has an impressive track record of outperformance. Our research shows that stocks rated Zacks Rank #1 (Strong Buy) and #2 (Buy) and Style Scores of A or B outperform the market over the following one-month period. Over the past two months, 5 earnings estimates moved higher compared to none lower for the full year.

The problem for investors is that BP is basically jumping in with both feet. If this move turns out to be a strategic misstep, it’s not going to be easy to fix. When OPEC forecasts a supply shortfall, it suggests that global oil supply may be constrained relative to demand.

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Energy has been by far the best-performing sector this year, in fact one of the very few industries that’s up on the year. That’s obviously because of high oil and gas prices, so is it too late to get in? For some energy stocks maybe, especially if their long term strategy is not aligned towards the energy transition. BP laid out its energy transition strategy – from integrated oil company to integrated energy company – more than two and a half years ago. This is being executed and means that, over time, BP will be less exposed to oil prices.

• The company changed its name following that event and the financial impact forced it to sell assets (effectively repositioning its business) and cut its dividend.
• Rupert has also founded and managed several businesses, including New York-based hedge fund newsletter, Hidden Value Stocks, written over 20 ebooks and appeared as an expert commentator on the BBC World Service.
• As the accident occurred a decade ago, most investors have completely forgotten about it, thinking that it does not affect the stock of BP anymore.
• It’s cash conversion ratio (at December 2021 year-end) of 131% is also helping.

Before Reuters, Ron reported on equity markets in New York in the aftermath of the 2008 financial crisis after covering conflict and diplomacy in the Middle East for AFP out of Israel. One risk the market may be overly worried about is the prospect of windfall taxes on the oil majors, so governments can score cheap political points and reduce budget deficits. The thing we must remember is that governments need companies like BP to supply energy and provide that security, so my view is that extreme windfall taxes are unlikely. In the UK the windfall tax has been offset by tax credits on new investment, which BP is taking advantage of, which secures future growth, and reduces the tax burden. With a dividend yield of over 4% and a trailing EV/EBITDA ratio of 3.8x and forward EV/EBITDA ratio of 2.4x, I can’t quite believe the cheapness of this stock. While the oil and gas sector is challenged in many ways, BP is a leader in the sector in changing direction away from high carbon businesses to low carbon businesses.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. According to data from Benzinga Pro, BP has a 52-week high of $41.38 and a 52-week low of $27.20. Even though momentum is a popular stock characteristic, it can be tough to define. Debate surrounding which are the best and worst metrics to focus on is lengthy, but the Zacks Momentum Style Score, part of the Zacks Style Scores, helps address this issue for us. Taking into account all of these elements, it should come as no surprise that BP is a #1 (Strong Buy) stock with a Momentum Score of A.

BP also said it expects to pay $1 billion under a UK windfall tax on the oil and gas sector between May 2022 and April 2023. 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. It is also remarkable that the total liabilities BP has paid so far for its accident are nearly equal to the total earnings of the company ($73.8 billion) since 2011.

Mending the balance sheet is another one of its key goals today, along with completely reshaping the company. When you step back, there’s a lot going on here and it’s all happening at the same time. The Zacks Momentum Style Score also takes into account trends in estimate revisions, in addition to price changes.