Will BP Beat Estimates This Time?



BP’s 3Q16 results versus estimates

BP (BP) is expected to post its 4Q16 results on February 7, 2017. Before we proceed with 4Q16 estimates, let’s look at how BP performed in 3Q16 in comparison to estimates.

In 3Q16, BP reported EPS (earnings per share) of $0.51 in 3Q16. However, upon adjusting on an underlying replacement cost (or URC) basis, BP’s adjusted EPS stood at $0.30 compared to estimated EPS of $0.25, beating analyst estimates.

BP reported earnings of $1,620 million in 3Q16, which translated to URC profits of $933 million in 3Q16 compared to $1,819 million in 3Q15. BP’s URC EBIT (earnings before interest and tax) also fell due to the decline in the earnings of all of the company’s segments year-over-year.

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BP’s 4Q16 estimates

Wall Street analysts expect BP to post EPS of $0.16 in 4Q16. The 4Q16 consensus estimated EPS is more than double its 4Q15 adjusted EPS but 46% lower than its 3Q16 EPS. BP’s revenues are estimated to be around $54.7 billion in 4Q16, 11% higher than 4Q15 revenues.

In 4Q16, average crude oil prices have been higher compared to 4Q15, which could result in better upstream earnings. However, the downstream earnings are likely to be lower due to a fall in BP’s global refining marker margins in 4Q16 compared to 4Q15. We’ll discuss this in the next part.

BP’s peer Chevron (CVX) is also expected to see its earnings more than double in 4Q16 over 4Q15. Plus, Royal Dutch Shell (RDS.A) and Total (TOT) are expected to post 19% YoY and 5% YoY higher EPS in 4Q16. The iShares Russell 1000 Value ETF (IWD) has ~13% exposure to energy sector stocks.


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