Yahoo Finance The Consensus EPS Estimates For BP p.l.c. (LON:BP.) Just Fell A Lot
One thing we could say about the analysts on BP p.l.c. (LON:BP.) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.
Following the downgrade, the consensus from 21 analysts covering BP is for revenues of US$172b in 2020, implying a concerning 36% decline in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 71% to US$0.046. Before this latest update, the analysts had been forecasting revenues of US$193b and earnings per share (EPS) of US$0.05 in 2020. There looks to have been a major change in sentiment regarding BP's prospects, with a measurable cut to revenues and the analysts now forecasting a loss instead of a profit.
Check out our latest analysis for BP
The consensus price target was broadly unchanged at US$4.74, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic BP analyst has a price target of US$6.84 per share, while the most pessimistic values it at US$2.25. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the BP's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast revenue decline of 36%, a significant reduction from annual growth of 4.4% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 11% next year. It's pretty clear that BP's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest low-light for us was that the forecasts for BP dropped from profits to a loss this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that BP's revenues are expected to grow slower than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of BP.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple BP analysts - going out to 2022, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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