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Factors to Pay Attention to Ahead of BP's Q1 Earnings Release

Zacks Equity Research

BP plc BP is set to report first-quarter 2020 results on Apr 28.

In the last reported quarter, the leading integrated energy company surpassed the Zacks Consensus Estimate, thanks to higher oil equivalent volumes from key upstream projects. Notably, the company beat the consensus estimates in all the prior four quarters, the average positive earnings surprise being 12.7%. This is depicted in the graph below:

Let’s see how things have shaped up prior to this announcement.

BP p.l.c. Price and EPS Surprise

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

Trend in Estimate Revision

The Zacks Consensus Estimate for first-quarter earnings per share of 25 cents has witnessed four downward revisions over the past 60 days. The estimated figure suggests a decline of 64.3% from the prior-year reported number.

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The consensus estimate for first-quarter revenues of $70.9 billion indicates a 5.2% increment from the year-ago reported figure.

Factors to Consider

Weak global energy demand owing to the coronavirus outbreak mostly led oil prices to trade in the bearish territory, especially in the last two months of the March quarter. The last month saw the lowest price in first-quarter 2020 since OPEC and Russia failed to agree on how much oil production to cut amid the pandemic. Thus, weak crude prices are likely to have hurt BP’s upstream operations.

Along with soft commodity prices, we expect hydrocarbon production volumes to have declined in the March quarter due to the outbreak. The consensus estimate for total hydrocarbon production is pinned at 2,591 thousand barrels of oil equivalent per day (MBoE/D), suggesting a drop from the year-ago quarter’s 2,656 MBoE/D.

We also expect the pandemic to have hurt the integrated firm’s refinery throughputs in the first quarter. The Zacks Consensus Estimate for the same is pegged at 1,718 thousand barrels per day (MBbl/D), suggesting a decline from 1,739 MBbl/D reported in the March quarter of 2019.

Earnings Whispers

Our proven model does not indicate an earnings beat for BP this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases chances of an earnings beat. That is not the case here as you will see below.

Earnings ESP: The company’s Earnings ESP is 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 25 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: BP currently carries a Zacks Rank #5 (Strong Sell).

Stocks to Consider

While an earnings beat looks uncertain for BP, here are some companies from the Energy space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

Enbridge Inc ENB has an Earnings ESP of +2.57% and is a Zacks #3 Ranked player. The company is scheduled to release first-quarter results before the opening bell on May 7. You can see the complete list of today’s Zacks #1 Rank stocks here.

Concho Resources Inc. CXO has an Earnings ESP of +1.36% and a Zacks Rank of 3. It is scheduled to report first-quarter results on Apr 30, after the closing bell.

Laredo Petroleum, Inc. LPI has an Earnings ESP of +5.23% and a Zacks Rank #3. The firm is slated to release earnings on May 6, after the closing bell.

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Enbridge Inc (ENB) : Free Stock Analysis Report
 
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