Why is bp stock so low: Big Oils Big Paradox: Record Profits, Low Stock Valuations
The group generated $7.6bn profit in 2021, compared with $20.3bn losses in 2020. Shares of Eni currently holds a Forward P/E ratio of 4.52, and its PEG ratio is 0.44. In comparison, its industry sports average P/E and PEG ratios of 7.40 and 0.53. In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system’s “Value” category.
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. You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
There’s a lot going on at BP given its size and industry position. But one of the key takeaways from the business update is that the energy giant is going to invest more money into its oil and natural gas business (“up to $8 billion more into oil and gas by 2030”). The basic idea is that BP’s increased investment will help the world transition more smoothly to clean energy while also helping countries ensure energy security.
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. By comparing earnings per share and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
BP’s P/B has been as high as 1.47 and as low as 0.96, with a median of 1.18, over the past year. While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies. But moving away from a clean-energy goal less than three years after announcing it, after having done a very similar thing in the past, doesn’t inspire confidence. There are too many other investment options in the industry for me to take on this company-specific risk.
BP and Daimler Truck AG are planning to work together to help accelerate the introduction of a hydrogen network for the decarbonisation of UK freight transport. “What I am really excited about is how the company’s current windfall will help BP accelerate its green transition. In hydrogen, BP has built a portfolio of options with potential capacity of 0.7 million to 1.3 million tonnes a year. In low-carbon energy, BP said it is on track to meet its target of developing 20 gigawatts of renewable power capacity by 2025, with 50GW by 2030.
It sees the price rising to 234p by the end of 2024 but falling again to 180p by the end of December 2025. Under the plans, BP will assess the feasibility of designing, constructing, operating and supplying a network of up to 25 hydrogen refuelling stations across the UK by 2030. BP has brought forward its target to halve its operational emissions by 2030, compared with the previous aim of a 30% to 50% cut. BP expects the global “oil supply and demand to move back into balance through 2022; however, with lower levels of spare capacity, price volatility is likely”. Eni sports a P/B ratio of 0.89 as well; this compares to its industry’s price-to-book ratio of 1.60. In the past 52 weeks, E’s P/B has been as high as 1.12, as low as 0.65, with a median of 0.98.
BP stock price forecast
The group plans to achieve its net-zero targets in targeting growth in five business segments – bioenergy, convenience, electric vehicle charging, renewables and hydrogen. As a result of its strong financial performance, BP has announced $4.15bn in share buybacks and increased dividend pay-outs to shareholders. The dividend pay-out per ordinary share for Q4 rose to $5.46, up by 4% from $5.25 during the same quarter in 2020. In this article, we delve deeper into the company’s latest news and developments, as well as the possible BP share price outlook. Investors use the P/B ratio to look at a stock’s market value versus its book value, which is defined as total assets minus total liabilities. BP’s current P/B looks attractive when compared to its industry’s average P/B of 1.60.
Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For instance, we’ve identified 1 warning sign for BP that you should be aware of. BP also expects the oil industry’s refining margins to remain broadly flat in the first quarter of 2022 compared to the fourth quarter of 2021. Furthermore, the global energy market is expected to be volatile in the coming months, amid geopolitical tensions, which makes the BP share price forecast for 2022 unpredictable.
While this may prove temporary, we’d consider it a negative, so we would not have expected to see the share price up. We might get a clue to explain the share price move by looking to other metrics. Big Oil has never been more profitable, but it has hardly ever been a smaller part of the stock market.
Inflation & Prices
Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely. Since 2019, BP has also doubled its EV charging points to more than 13,000 worldwide and plans to expand further to install more than 100,000 charging points by 2030. BP will be focusing on fast and on-the-go charging – almost half BP’s current network is fast or ultra-fast. The group aims to increase the energy sold across its EV charging networks by 100-fold from 2019–2030.
As turbluence characterises the current oil markets BP has further signalled its commitment to alternative energy with a £1bn, 10 year, investment in electric vehicle charging stations in the UK. This metric is found by dividing a stock’s price with the company’s revenue. This is a prefered metric because revenue can’t really be manipulated, so sales are often a truer performance indicator. Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB exchanges.
Add this to the strength of its earnings outlook, and we can clearly see that BP and E is an impressive value stock right now. E’s Forward P/E has been as high as 9.54 and as low as 3.12, with a median of 4.84. During the same time period, its PEG ratio has been as high as 1.27, as low as 0.30, with a median of 0.47. You can see below how earnings and revenue have changed over time . The company cut its dividend, at least partly as a way to fund the transition.
The BP board will decide if any dividends are payable based on the overall group’s profit. BP declared a dividend of $5.46 a share payable on 8 February 2022, however, please note that not all shares are eligible for dividend payment. We recommend that you always do your own research, and consider the latest market trends, news, technical and fundamental BP stock analysis, and expert opinion before making any investment decision. However, the consensus one-year BP stock price target of Wall Street analysts is 463p, according to data provided by MarketBeat, which would represent a 23% premium over today’s price.
According to the BP PLC historical share price, BP stock prices have been rising over the past year since falling below 200p in October 2020 at the height of the Covid-19 pandemic. Despite rising to a peak of 417p on 11 February, they remained 39% below the all-time highs of £6.88 reached on 13 April 2006. BP is currently sporting a Zacks Rank of #2 , as well as an A grade for Value. BP’s Forward P/E has been as high as 7.57 and as low as 3.94, with a median of 5.31, all within the past year.
Why I Don’t Trust BP Enough to Buy It
BP has already completed a six-year programme that delivered 35 projects, including 11 major projects that started production since the start of 2020. The oil producer has said that the Organization of Petroleum Exporting Countries Plus’s (OPEC+’s) decision on oil production levels will remain a key factor in prices and market rebalancing. I guess BP’s management team got that directional change wrong, since it’s now started to reverse course. The bigger problem is that the 2020 shift included a dividend “reset,” pitched as a way to help the company achieve its new goals, though it was also a way to help mend a debt-heavy balance sheet. In other words, dividend investors got hit hard by the 2020 business overhaul. CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities.
When looking at BP’s future stock price, it’s important to bear in mind that analysts’ forecasts and price targets can be wrong. Analysts’ BP stock-price predictions are based on making fundamental and technical studies of the stock’s performance. It’s good to see that BP has rewarded shareholders with a total shareholder return of 44% in the last twelve months. That gain is better than the annual TSR over five years, which is 4%.
You should always do your own research to make informed trading decisions. Keep in mind that past performance is no guarantee of future returns. Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
84% of retail investor accounts lose money when trading CFDs with this provider. We think that the revenue growth of 65% could have some investors interested. We do see some companies suppress earnings in order to accelerate revenue growth. During the last year BP saw its earnings per share drop below zero.
Since the end of 2019, the group has quadrupled its renewables development pipeline from 6GW to 24.5GW. BP is still making payments for the Deepwater Horizon oil spill and explosion of 2010, so far totalling some $60bn, which it initially agreed to pay in instalments over an 18-year period. The group has said that the ongoing Gulf of Mexico oil-spill payments for 2022 are expected to be around $1.4bn pre-tax.