Yahoo Finance Here's Why BP Shares Have Gained 23.9% in the Past Year
BP plc BP has gained 23.9% in the past year compared with 8.1% growth of the composite stocks belonging to the industry.
The company, currently carrying a Zacks Rank #3 (Hold), has witnessed upward earnings estimate revisions for 2023 and 2024 in the past 60 days.
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What’s Favoring the Stock?
The price of West Texas Intermediate crude is trading over the $68-per-barrel mark, highlighting a handsome commodity pricing environment. The positive oil price trajectory is a boon for BP’s upstream operations.
In 2022, BP’s total hydrocarbon production increased 4.9% to 957 thousand barrels of oil equivalent per day. For 2023, the British energy giant forecast both reported and underlying upstream production to match the prior year. Although global commodity prices tumbled in the second half of 2022, the favorable oil price scenario and increasing daily oil equivalent production volumes will aid the energy giant’s bottom line.
BP is expected to gain from the refining business. The integrated energy player has a significant portion of its refining capacities in the United States. In the country, the company operates as feedstock-advantaged and sophisticated refineries. The refineries are connected to strong logistics and fuel infrastructure.
In the first quarter of 2023, BP expects industry refining margins to remain elevated. Thus, with a considerable presence in the United States, the energy major is well-placed to capitalize on the solid fuel demand.
BP earned divestment and other proceeds worth $15.9 billion since the second quarter of 2020. The company expects $2-$3 billion of divestment and other proceeds in 2023, with a target to reach $25 billion between the second half of 2020 and 2025.
BP is strongly focused on returning capital to shareholders. It plans to execute a $2.75-billion share buyback program, which is expected to be completed before its first-quarter 2023 results. The company declared a dividend per ordinary share of 6.610 cents for the December-end quarter, reflecting an increase of 10%.
Risks
For 2023, BP expects Gulf of Mexico oil spill payments of $1.3 billion pre-tax, which includes $1.2 billion pre-tax to be paid in the second quarter. This might affect its profitability.
Stocks to Consider
Investors interested in the energy sector might look at the following companies that presently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Sunoco LP’s SUN fourth-quarter 2022 earnings of 42 cents per unit missed the Zacks Consensus Estimate of 77 cents. Weak quarterly earnings resulted from the higher total cost of sales and operating expenses.
Sunoco has witnessed upward estimate revisions for 2023 earnings in the past 30 days. For 2023, Sunoco expects adjusted EBITDA of $850-$900 million.
RPC Inc.’s RES adjusted earnings of 41 cents per share in the fourth quarter beat the Zacks Consensus Estimate of 30 cents. The strong quarterly results were backed by higher activity levels in all the service lines and rising equipment utilization.
As of Dec 31, RPC had cash and cash equivalents of $126.4 million, up sequentially from $73.2 million. Nonetheless, the company managed to maintain a debt-free balance sheet.
Valero Energy Corporation’s VLO fourth-quarter 2022 adjusted earnings of $8.45 per share beat the Zacks Consensus Estimate of $7.45 per share. The strong quarterly results were driven by increased refinery throughput volumes and a higher refining margin.
Valero can benefit from the Gulf Coast export volumes as fuel demand recovery gets support from Asia economies. The Gulf Coast contributed 59.4% to the total throughput volume in the fourth quarter of 2022.
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BP p.l.c. (BP) : Free Stock Analysis Report
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