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Can BP plc (BP) Pull a Surprise this Earnings Season?

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Oil giant BP plc (BP - Free Report) is expected to report fourth-quarter 2016 earnings around Feb 7, before the opening bell.

In the last reported quarter, the company delivered a positive earnings surprise of 36.36%. However, over the last four quarters, the company’s average positive surprise was 33.27%.

Let’s see how things are shaping up for this announcement.

BP p.l.c. Price and EPS Surprise

 

BP p.l.c. Price and EPS Surprise | BP p.l.c. Quote

Factors to Consider This Past Quarter

BP is one of the largest integrated energy firms in the world with a strong and diversified portfolio of development projects that offer attractive long-term opportunities. Though its size and impressive portfolio bode well, the company’s upstream business is likely to underperform this time around.

However, the downstream business seems to have fallen on hard times. This is because the company projected refining margin for the quarter to be under pressure owing to increased turnaround activities.

What Our Model Indicates

Our proven model does not conclusively show that BP is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates. That is not the case here as you will see below.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -30.44%. This is because the Most Accurate estimate stands at 16 cents while the Zacks Consensus Estimate is pegged at 23 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: BP has a Zacks Rank #3. Despite the company’s favorable Zacks Rank, its negative Earnings ESP complicates our surprise prediction.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions.

Stocks That Warrant a Look

Here are some companies in the energy sector with the right combination of elements to post an earnings beat this quarter:

Cimarex Energy Co. , which is expected to release earnings results on Feb 15, has an Earnings ESP of +1.72% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Newfield Exploration Company has an Earnings ESP of +5.41% and a Zacks Rank #3. The company is expected to release earnings results on Feb 22.

SM Energy Company (SM - Free Report) has an Earnings ESP of +9.52% and a Zacks Rank #3. The company is expected to release earnings results on Feb 28.

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