A Quick Look At BP's EPS Forecasts

Published in Company Comment on 19 November 2012

How might earnings at BP (LSE: BP.) change in the years to come?

It's always worth keeping an eye on the earnings forecasts for your favourite companies, especially if you use forward price-to-earnings (P/E) ratios to gauge when to buy and sell your shares.

You never know, if City brokers have been revising their projections of late, your investments may not be as cheap -- or expensive -- as you think!

Today I'm looking at the earnings per share (EPS) forecasts for BP (LSE: BP) (NYSE: BP.US), the FTSE 100 (UKX) integrated oil company. All my figures are courtesy of S&P Capital IQ.

The consensus for 2013 is for earnings per share of 62p, which puts the 416p shares on a forward P/E of 6.6.

The estimates suggest earnings may rise to 65p per share for 2014 and climb to 73p for 2015. Earnings per share may then rise further to 81p, at least according to City analysts.

The data from S&P Capital IQ also indicates BP's revenues may be flat at around £220bn in 2013 and 2014 before climbing 7% to £233bn the year after.

The outlook for revenues at BP isn't great although profits may improve over the next few years. But then again, that P/E of around 6.6 looks like the market is already expecting BP to tread water for a while yet.

Whether these projections make BP a buy, a hold or a sell is, of course, up to you given that it is cheaper than the FTSE, which at 5,656 trades on a P/E of 11.4.

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> David owns shares in BP.

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vinchainsaw 19 Nov 2012 , 5:23pm

The problem with BP is that it is selling assets left and right to pay for the fines etc from the Gulf spill.

Selling off assets means less income-generating assets in the years ahead.

Not yet long BP, but watching it very closely.

4spiel 20 Nov 2012 , 12:32pm

It has always been BP policy to divest itself of resources that it considers of weak impact onf the marginal revenue curve and aim to redeploy capital onto stronger streams. Is the selling to pay spill fines actually cutting indeed into the desirable core assets ? BP is losing TNK revenues in return for a capital return to be partly used for a buyback that repays part of the capital used to acquire the. asset. A question that also arises is the Rosneft venture going to be negative on cash flows ie will capital expenditure exceed returns /dividends from Rosneft. Personally I do not like to be without BP but am in no hurry to add.

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