BP’s growth estimate
In this article, we’ll discuss BP (BP), the integrated energy stock expected to post the highest fall in earnings.
BP is a British integrated energy firm with downstream, upstream, and Rosneft segments. BP ranks fifth among six integrated firms with an estimated fall of 11% in EPS in 2019. In 2018, BP’s adjusted EPS (per ADS) stood at $3.8. In 2019, BP is estimated to post EPS of $3.4. Further, BP is expected to post EPS of $0.7 in Q1 2019, which is likely to fall by 10% YoY.
BP has a strong upstream projects pipeline that is expected to bring in hydrocarbons growth. The company began six major upstream projects in 2018. Further, BP (BP) expects 16 major projects to begin production between 2019 and 2021. Overall, the 35 projects that have started since 2016 cumulatively are expected to contribute about 900 thousand barrels of oil equivalent per day of new production, net to BP, by 2021.
Valuations and dividends
BP trades at a forward PE of 12.6x, below the peer average of 14.5x. The lower valuations that the market accords to BP could be due to its debt position, which does not look comfortable. BP’s total debt-to-capital ratio is higher than the peer average.
However, BP’s current dividend yield stands at 5.5%, above the peer average of 4.6%. Moreover, BP is repurchasing shares to offset scrip dilution. In 2018, BP’s share buybacks stood at $0.4 billion.
Overall, BP has a higher dividend yield and lower valuation but is expected to see a fall in earnings in 2019.