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BP plc (BP) to Report Q1 Earnings: What's in the Cards?

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BP p.l.c. (BP - Free Report) is expected to report first-quarter 2018 earnings on May 1, before the opening bell.

Last quarter, the company delivered a negative earnings surprise of 3.03%. BP managed to beat the Zacks Consensus Estimate in three of the last four quarters, the average positive surprise being 30.7%. Let’s see how things are shaping up for this announcement.

Factors to Consider This Past Quarter

Per the U.S. Energy Information Administration, the average monthly price of West Texas Intermediate (WTI) crude for the month of January, February and March was recorded at $63.70 per barrel, $62.23 per barrel and $62.73 per barrel, respectively.

Notably, the commodity never crossed the $60 psychological mark in the 2015 to 2017 period. The production cut extension agreement by the OPEC players through 2018-end primarily supported the crude rally.

The improvement in the oil price has been favorable for BP’s upstream businesses. Also, through first-quarter 2018, the company expects production to remain flat sequentially, thanks to the startup of several key upstream developments last year.

Although the upstream business seems lucrative for BP, the scenario could be contradictory for the refining business. BP expects a drop in refining margin in first-quarter 2018. 

What Our Model Indicates

Our proven model does not conclusively show a beat for BP this earnings season. 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 67 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.

BP p.l.c. Price and EPS Surprise

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

Stocks to Consider

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

Solaris Oilfield Infrastructure, Inc. has an Earnings ESP of +6.28% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

EOG Resources, Inc. (EOG - Free Report) has an Earnings ESP of +4.07% and a Zacks Rank #1.

Continental Resources, Inc. has an Earnings ESP of +1.35% and a Zacks Rank #3.

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