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Factors to Pay Attention to Ahead of BP's Q2 Earnings Release

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BP plc (BP - Free Report) is set to report second-quarter 2019 earnings on Jul 30. The British energy giant managed to beat the Zacks Consensus Estimate in three of the past four quarters, the average beat being 17.5%. Let’s see how things are shaping up for this announcement.

Factors to Consider

The pricing scenario of crude through the June quarter of 2019 weakened year over year, acting as a major drag for BP’s upstream operations. However, the production picture is promising since the company expects year-over-year production growth on ramped up volumes in key projects.

Although oil prices were not in favor of upstream activities, the downstream business was profitable since the company could purchase raw crude at lower prices to produce refined petroleum products. Owing to this, the integrated energy firm reported global Refining Marker Margin for the June quarter of 2019 of $15.2 per barrel, healthier than the last three quarters.

What Our Model Indicates

Our proven model does not conclusively suggest 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. 

Earnings ESP: Earnings ESP for the company is -4.95% as the Most Accurate Estimate stands at 74 cents, lower than the Zacks Consensus Estimate of 78 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 an Earnings ESP of -4.95% makes surprise prediction difficult. Meanwhile, 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. price-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: 

TransCanada Corporation (TRP - Free Report) has an Earnings ESP of +0.34% and a Zacks Rank #3. The firm is expected to release quarterly reports on Aug 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Holly Energy Partners LP has an Earnings ESP of +1.18% and a Zacks Rank #2. The company is anticipated to release second-quarter earnings on Jul 31.

Enbridge Inc. (ENB - Free Report) is set to report second-quarter 2019 earnings on Aug 2. The stock has an Earnings ESP of +8.88% and a Zacks Rank #3.

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