Back to top

Image: Bigstock

What's in the Cards for BP plc (BP) This Earnings Season?

Read MoreHide Full Article

Oil giant BP plc (BP - Free Report) is expected to report third-quarter 2016 earnings on Nov 1, before the opening bell.

In the last reported quarter, the company delivered a negative earnings surprise of 11.54%. However, over the last four quarters, the company’s average earnings surprise was positive 44.63%.

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

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.

The crude pricing environment during the third-quarter was comparatively weaker than the year-ago period. As a result, the company’s upstream business is likely generate less cash flow after selling the commodity at lower prices.

In fact, the company projects third-quarter production to be below the level in the April–June quarter of 2016 owing to maintenance works and seasonal turnaround activities. In the face of lower production, the company is unlikely to generate much profitability this quarter.

The downstream business too 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 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 22 cents. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank: BP has a Zacks Rank #3. Despite the company’s favorable Zacks Rank, its 0.00% Earnings ESP complicates our surprise prediction.

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

BP PLC Price and EPS Surprise

 

BP PLC Price and EPS Surprise | BP PLC Quote

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:

CONE Midstream Partners L.P. , which is expected to release earnings results on Nov 4, has an Earnings ESP of +2.70% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Devon Energy Corp. (DVN - Free Report) has an Earnings ESP of +20.00% and a Zacks Rank #2. The partnership is anticipated to release earnings on Nov 1.

Comstock Resources Inc. (CRK - Free Report) has an Earnings ESP of +3.74% and a Zacks Rank #2. The company is likely to release earnings on Nov 8.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>  


Unique Zacks Analysis of Your Chosen Ticker


Pick one free report - opportunity may be withdrawn at any time


BP p.l.c. (BP) - $25 value - yours FREE >>

Devon Energy Corporation (DVN) - $25 value - yours FREE >>

Comstock Resources, Inc. (CRK) - $25 value - yours FREE >>