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Buy This Cheap Oil Stock for Big Dividends, Value & Upside Potential?
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BP (BP - Free Report) is an oil and gas giant, operating across nearly the entire hydrocarbon landscape. The company took a hit when it exited its Russian segment earlier this year. Still, BP’s outlook remains strong as it invests in the future of oil and hydrocarbons, alongside renewables.
Many of BP’s overall fundamentals are impressive, from its value to its dividend payout. Plus, it’s trading for less than $30 per share heading into its second quarter earnings release on Tuesday, August 2.
The BP Basics
BP Plc is an integrated oil and gas company that operates across the entire hydrocarbon lifecycle, from exploration and production to refineries, terminals, and pipelines, and beyond. The company is heavily invested in creating lower carbon and greener energy solutions, including liquefied natural gas and onshore and offshore wind. BP is also betting on the future of green, with some substantial investments in green hydrogen and more.
Oil prices rebounded in a serious way off their covid lows and floated between roughly $50 and $80 a barrel in 2021. Oil then began 2022 at $75 a barrel before surging to over $120. Prices currently hover around $100 a barrel, and demand is likely to remain strong in the back half of the year despite slowing economic growth.
Global demand for oil and other hydrocarbon energy is likely poised to stay robust for decades to come. The recent geopolitical situation in Ukraine highlights the need for oil and natural gas throughout the world, even as renewable investments increase.
Image Source: Zacks Investment Research
Other Fundamentals
Both BP’s second and third quarter revenue is projected to climb by roughly 41% to help lift its adjusted earnings by 165% and 112%, respectively. Zacks estimates call for its fiscal 2022 earnings to soar 107% to $7.89 per share on 30% higher sales that would see it pull in $212.93 billion.
On top of that, BP’s FY22 consensus earnings estimate has climbed 17% over the last few months, with its FY22 outlook 21% higher. This bottom-line positivity helps BP land a Zacks Rank #1 (Strong Buy) right now. The stock also topped our EPS estimates by 36% last quarter, for its fifth-straight beat.
BP’s Oil and Gas-Integrated-International space is in the top 7% of 250 Zacks industries to highlight the strength of the industry, even as Wall Street worries that oil prices have already peaked. With this in mind, BP shares have pulled back from their early June highs. And BP’s Zacks consensus price target marks 24% upside to the roughly $29 per share it was trading at on Friday afternoon.
Image Source: Zacks Investment Research
Bottom Line
BP shares are up 21% in the last year and 10% in 2022 to lag its industry. But it trades at a 32% discount to its highly-ranked industry and right near its own 20-year lows at 4.1X forward earnings.
Alongside its value, BP’s 4.5% dividend yield tops its industry’s 4% average and blows away the S&P 500’s 1.5%. BP also plans to keep buying back more of its own shares.
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Buy This Cheap Oil Stock for Big Dividends, Value & Upside Potential?
BP (BP - Free Report) is an oil and gas giant, operating across nearly the entire hydrocarbon landscape. The company took a hit when it exited its Russian segment earlier this year. Still, BP’s outlook remains strong as it invests in the future of oil and hydrocarbons, alongside renewables.
Many of BP’s overall fundamentals are impressive, from its value to its dividend payout. Plus, it’s trading for less than $30 per share heading into its second quarter earnings release on Tuesday, August 2.
The BP Basics
BP Plc is an integrated oil and gas company that operates across the entire hydrocarbon lifecycle, from exploration and production to refineries, terminals, and pipelines, and beyond. The company is heavily invested in creating lower carbon and greener energy solutions, including liquefied natural gas and onshore and offshore wind. BP is also betting on the future of green, with some substantial investments in green hydrogen and more.
Oil prices rebounded in a serious way off their covid lows and floated between roughly $50 and $80 a barrel in 2021. Oil then began 2022 at $75 a barrel before surging to over $120. Prices currently hover around $100 a barrel, and demand is likely to remain strong in the back half of the year despite slowing economic growth.
Global demand for oil and other hydrocarbon energy is likely poised to stay robust for decades to come. The recent geopolitical situation in Ukraine highlights the need for oil and natural gas throughout the world, even as renewable investments increase.
Image Source: Zacks Investment Research
Other Fundamentals
Both BP’s second and third quarter revenue is projected to climb by roughly 41% to help lift its adjusted earnings by 165% and 112%, respectively. Zacks estimates call for its fiscal 2022 earnings to soar 107% to $7.89 per share on 30% higher sales that would see it pull in $212.93 billion.
On top of that, BP’s FY22 consensus earnings estimate has climbed 17% over the last few months, with its FY22 outlook 21% higher. This bottom-line positivity helps BP land a Zacks Rank #1 (Strong Buy) right now. The stock also topped our EPS estimates by 36% last quarter, for its fifth-straight beat.
BP’s Oil and Gas-Integrated-International space is in the top 7% of 250 Zacks industries to highlight the strength of the industry, even as Wall Street worries that oil prices have already peaked. With this in mind, BP shares have pulled back from their early June highs. And BP’s Zacks consensus price target marks 24% upside to the roughly $29 per share it was trading at on Friday afternoon.
Image Source: Zacks Investment Research
Bottom Line
BP shares are up 21% in the last year and 10% in 2022 to lag its industry. But it trades at a 32% discount to its highly-ranked industry and right near its own 20-year lows at 4.1X forward earnings.
Alongside its value, BP’s 4.5% dividend yield tops its industry’s 4% average and blows away the S&P 500’s 1.5%. BP also plans to keep buying back more of its own shares.