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Can BP Plc (BP) Spring a Surprise this Earnings Season?

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Oil giant BP plc (BP - Free Report)   is expected to report second-quarter 2017 earnings on Aug 1, before the opening bell.

Last quarter, the company delivered a positive earnings surprise of 21.05%. Over the last four quarters, the company’s average earnings surprise was a positive 6.78%. Let’s see how things are shaping up for this announcement.  

Factors to Consider This Past Quarter

As compared to the year-earlier quarter, pricing environment for both oil and natural has improved. This should prove favorable for the company’s upstream business as the commodities produced could be sold at higher prices.

BP projects flat sequential production for second-quarter 2017 owing to a consistent ramp up of key developments. However, maintenance works and seasonal turnaround activities may limit the upside.

The downstream business unit seems profitable. As for second-quarter 2017, the company anticipates an improvement in refining margin over the first-quarter 2017 figure. However, the increased turnaround activities during the April–June quarter of 2017 could partially offset the improvement.

Q2 Price Performance

BP has gained 0.4% in the second quarter versus the 3.1% fall of its industry.

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 for the company is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a profit of 39 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, which increases the predictive power of ESP. But we need a positive ESP to be confident of a beat.

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 revision.

Stocks to Consider

Here are some companies from the energy sector that, according to our model, have the right combination of elements to post an earnings beat this quarter: 

Boardwalk Pipeline Partners LP (BWP - Free Report) has an Earnings ESP of +6.90% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

TransCanada Corporation (TRP - Free Report) has an Earnings ESP of +7.84% and a Zacks Rank #1.

C&J Energy Services Inc. (CJ - Free Report) has an Earnings ESP of +100.00% and a Zacks Rank #3.

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