BP Fundamental Research Investment Analysis, BP PLC - Shs American Deposit.Receipt Repr.6 Shares

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The Razor's Edge

2-Year Price History

Recent Price
(2/6/2009)
$45.54
52-Week Price
$37.57 - $77.69
Market Capitalization
$143.1 Billion
Dividend Yield
7.40%
Most Recent Dividend
$2.54

About BP PLC - Shs American Deposit.Receipt Repr.6 Shares

BP PLC - Shs American Deposit.Receipt Repr.6 Shares is considered to operate in the Basic Materials sector. They specifically operate in the Major Integrated Oil/Gas business segment contained within the Energy industry.

The Company is engaged exploration and production's activities include oil and natural gas exploration and Renewable businesses.

Ockham's Rating

As frequent users of Ockham Research are aware, we strive to adhere to the principal of Ockham's Razor. This company ideal drives us to keep our stock analysis as simple as possible, but of course, no simpler than is necessary. It is in that vein that we focus much of our analysis on fundamental factors, peer analysis, and valuations versus historically normal ranges. However, we also apply standard deviation and volatility studies for each index and sector in order to understand more completely the risks associated with each market environment.

It is always scary to upgrade stocks in a market where everything seems to be headed downwards, but it is important to remember that these drops in price are often the best time to buy a bargain. We are not yet ready to upgrade BP as of this week's report because the fundamentals have not crossed a strategic threshold in our methodology, but we are certainly becoming more interested in some of the value that is being uncovered in this market downturn.

It is often helpful to begin our analysis with recent price changes, the price of BP rose from $42.47 as of 01/31/2009 to a price of $45.54 as of 02/07/2009. While this increase of 7.23% was not large enough for Ockham to downgrade the stock, it does however slightly lessen the attractiveness of BP.

As of this report, there have been no meaningful adjustments in cash earnings expectations or guidance in the last week.

BP Stock Evaluation

We are reiterating our rating of Undervalued on BP at this time. As described in the Recommendation Summary, we have not seen any additional guidance or change in expectations to BP’s earnings, but we have seen a relatively significant increase in its share price of 7.23%. This increase in price is significant and should be noted as we look further into the fundamental picture of BP below.

BP Revenue

As we have often noted, in our valuation methodology, "Cash is King." Well, it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company's stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 10 years. For, BP the high and low end of the Price to Sales per share ratios are 0.73x and 0.52x respectively.

Notice that BP's current Price to Sales per share ratio is 0.52x, which is quite a bit below what we consider a normal Price to Sales ratio for this stock. Given normal conditions and a price of $45.54, BP is 17% below where we would expect to see it. This will beneficially factor into our final analysis of BP as it is not often that this stock sinks to these levels.

BP Cash Earnings

As a value investment framework, Ockham Research is similar to a private equity firm in terms of our valuation methods. We are always on the lookout for value in the form of sales and cash numbers. In the case of BP, Ockham views their current Cash Earnings as significantly below their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for BP, the current level of Cash Earnings compared to its historical levels helps identify where BP is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 6.51 and a historical low Cash Earnings per share ratio of 4.63, an investor can relate where value becomes optimal.

So what does "significantly below" mean when we talk about Price to Cash Earnings numbers for BP? From the Ockham perspective, we are looking specifically at BP to see if the market is recognizing the huge disparity between BP's past stock price to Cash Earnings ratio to today's levels. At a difference of 34% below the average historical Price to Cash Earnings ratio, our view would be quite positive at this point. However, as with all metrics, we need to also take other factors into account when looking at BP. While we view better Cash Earnings metrics as very important, if the market is slow to identify this value, or if Cash Earnings were to fall from these levels, we would become more neutral in our stance.

BP Dividends

While it is not necessary to pay an attractive dividend or a dividend at all, to receive a positive rating from Ockham, we view dividends as an additionally helpful measure in determining the future potential of any company.

In BP’s case, the estimated annual dividend is $3.36 resulting in a current dividend yield of 7.38%. Similar to our review of Sales and Cash Earnings per share, we evaluate dividend yields from BP against the historic high and low levels over the past 10 years. The highest dividend yield from BP over this period was 8.94% while the lowest dividend yield was 2.23% BP’s current dividend yield is therefore significantly higher than its median dividend yield historically. In fact, the current yield is 32.14% above the median which weighs very positively on our analysis of BP.

Peer Comparison

:

BP PLC - Shs American Deposit.Receipt Repr.6 Shares Industry Grouping

(2/6/2009)
Company Ticker Market Cap (Ml) Latest
Price
Price/Cash Earnings Price/Sales 5-Yr. Rev.
Growth Rate
5-Yr.
Avg. ROE.
Current 10-Yr. Range* Current 10-Yr. Range*
Peer Company Averages (not incuding BP) 3.79 2.85 » 10.91 0.64 0.47 » 1.70 20.50% 24.65%
*10 year range does not include current year values
PetroChina Co. Ltd. ADS PTR $153.4 Billion $83.80 4.26 2.34 » 16.45 1.09 0.77 » 4.18 31.10% 22.74%
Chevron Corp. CVX $152.2 Billion $74.90 4.20 3.24 » 15.37 0.56 0.41 » 1.07 17.34% 24.32%
BP PLC - Shs American Deposit.Receipt Repr.6 Shares BP $143.1 Billion $45.54 3.69 3.19 » 12.31 0.52 0.41 » 1.54 9.73% 22.08%
Total SA TOT $129.5 Billion $54.61 4.34 3.65 » 9.76 0.64 0.48 » 1.15 13.16% 28.52%
Royal Dutch Shell PLC Class A RDSA $91.9 Billion $51.82 3.16 2.53 » 6.26 0.33 0.27 » 0.78 n/a 24.25%
ENI Spa E $91.4 Billion $45.65 3.01 2.46 » 6.71 0.55 0.42 » 1.32 20.41% 23.42%
Current
Rating on:
BP
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RazorWire™ & Community Discussion

Mad Money
2/6/2009 6:22 PM
Mad Money
Gas, for actionsalertsplus.Com, for my charitable trust I decided to go only with dividend my favorite one is conoco which is yielding 4% at open today and I like BP, which is up from 39 earlier this week to $44.45. I think that anadarko is the best run. Does not have a yield. You know how I feel either recession resistant or it has to
Mad Money
2/4/2009 6:06 PM
Mad Money
Replace 80% of the production. Replaced 100% of the production. Metric I find is still the single best derlnent of future stock prices when it comes to BP 5% production growth. Chevron, 1%. Natural gas, devin posed a fourth quarter loss and gets panned by mad money. Which heads perfectly in you on
Squawk Box
2/4/2009 8:44 AM
Squawk Box
We need to see a rebound in the that's going to occur. Tell tale is when we finally get oil back above the mid $50 range. All the producers, BP, shell, opec, are all telling us oil, $06 to $70 range is fairly when we get oil back into that we mote economy has rebounded and and that's the time that
Fox Business
2/3/2009 10:16 AM
Fox Business
Reports of the swiss bank reportedly considered selling its u.S. Based brokerage unit to only up1/2 a% now. One of the big stories of the day. BP, the big oip company reporting the first quarterly loss in seven years, losing 3.3 billion dollars on lower prices and falling demand, BP shares only down 1%. They were down 5% when this news in the airline sector, bad news for sas, scandanavian airlines reporting some rough numbers,
Squawk On The Street
2/3/2009 9:09 AM
Squawk On The Street
You've got rio tinto on this particular shot. You have BP lower by one erer by 1.5%. Coming back towards the price we head towards the close in two and a half hours time. This is a real stand out story with vodafone.
The Opening Bell on Fox Business
2/3/2009 9:04 AM
The Opening Bell on Fox Business
Swiss bank considered selling the u.S. Based brokerage unit to ubs stock flat, but now what, investorsy they're serious about stream lining operations. BP, the big oil company, reporting the first quarterly loss in seven years, losing 3.3 billion dollars in the last quarter on falling demand in BP stock down 3% and what a rough day it's been for saf, the scandanavian airline. Saying it's going to cut up to 9,000 jobs, 40% nearly of its
Money For Breakfast
2/3/2009 8:30 AM
Money For Breakfast
Far. -- as you can tell, very flat so ftse 100 on the plus side by about 5 points or so. Shares on BP down 2% after the big oil company announced first quarterly loss in seven years losing 3.3 billion dollars. Also royal dutch shell down 1 1/2% in london. In the airline sector, good
Money For Breakfast
2/3/2009 8:02 AM
Money For Breakfast
Side nearly a quarter percent. Also up a third of a percent on the dax index in germany. Despite some of these miserable company earnings reports. Now, low oil prices certainly cutting into BP's profits. Europe's second biggest oil company reporting its first quarterly loss in seven years. Fourth quarter profits down 42 1/2% on a loss of 3.3 billion dollars as prices and demand BP stock down 2 1/3. But it has been down more than that this morning. There is better news for the world's biggest mobile phone company. Vodafone says third quarter sales up 14%. Thanks in part to a weaker pound
Money For Breakfast
2/3/2009 7:23 AM
Money For Breakfast
Down slightly in paris. Up or basically flat also for not a whole lot of conviction in all right one of the big stories of the day so far as far as earnings go is BP europe's second biggest oil company reporting its first quarterly loss in seven years. Fourth quarter profits down 42 1/2% on a falling crude oil prices and of course a slump in demand the loss was 3.3 billion dollars. That is more than was expected. BP's stock now down 3 1/2%. It is a different story for that's the world's largest mobile phone company. It says that third quarter sales up 14% thanks to a weak pound and definitely some increased
Money For Breakfast
2/3/2009 7:01 AM
Money For Breakfast
Flat as we trade today. We've been trying to get to the we are off our morning lows. There you have it. London down. But it has been worse this BP usually stands for big profits, how about blah performance. Europe's second biggest oil company reporting first quarterly loss in seven years. Fourth quarter profits were down 42 1/2% on a loss of 3.3 billion dollars as prices and demand BP stock down 3%. A massive overhaul for scandinavia's flagship carrier sas putting out an sos is reporting a net loss of 332 million dollars. The airline also announcing that
Squawk Box
2/3/2009 6:36 AM
Squawk Box
The different between buddy holly and don mcclain. All these markets are down, market just stuck its ahead above the flat line. BP, one of the big drags on the not too bad throughout this whole decline. If you notice, it's down 11% this year. They never rallied too much while we were trading.
Squawk Box
2/3/2009 6:34 AM
Squawk Box
Coming up at 10:00 eastern >> maybe you'll hear some talk about it, anyway. >> let's get a check on the markets this morning. Europe is having a little trouble getting started. Slightly weak. That BP number didn't help them very much at all. The dow, as you saw yesterday, had a little action in terms of technology stock peps we've got some small caps moving a little bit, which gave some people some
Squawk Box
2/3/2009 6:31 AM
Squawk Box
Fleet buyers are expected to hurt overall results. >> in other earnings news this morning, BP is under pressure investments steady this year. It has not helped prices in
Squawk Box
2/3/2009 6:05 AM
Squawk Box
Preliminary and are not likely to resurface. Ubs has held joint venture talks with wachovia's securities unit. Shares of BP are under pressure the oil giant's fourth quarter results missing the mark. BP's ceo sees output up and investment steady this year. That's what we've been hearing from a lot of the oil companies that even as the prices have they do expect to keep spending for exploration. >> sandisk shares that were hit
Mad Money
1/30/2009 6:03 PM
Mad Money
To fill out a portfolio that we're still hunting. We're hunting with machine guns. That means searching for those accidental high yielders. How about this, stocks that report next week, BP named tupper ware, where ceo owings spoke encouragingly on this show earlier this week and kraft, mac
Squawk On The Street
1/30/2009 9:26 AM
Squawk On The Street
>> interesting, too when he talks about this, it is worth reminding that when the numbers are so big, when you add up big oil in this country -- not even this country, even BP, they only control about 7% of the actual reserves in the ground. All the rest of it, the 93% is controlled by state-owned oil company, whether it's venezuela
Squawk On The Street
1/30/2009 9:07 AM
Squawk On The Street
The deadline is on sunday. Different reports as to how they are progressing. And andy lipow of lipow associates says that BP plans to shut down all of its refine ris. That will be supportive for the commodities this month doing pretty well. Their best month since mid2008. Gold once again the standout, up
Mad Money
1/29/2009 6:34 PM
Mad Money
The right place at the wrong time with the environmental issues today. We're set for a really bright future. Every time the stock jumps people say BP. >> that's the decision for shareholders and for our board to make. I expect to retire from this company, though, and I believe it will be in a much high are stock price than today.
Mad Money
1/29/2009 6:29 PM
Mad Money
Hedged on 82% of the gas. It looks like chesapeake has done what it needed to to right size the business and shore up its balance sheet. I prefer the safety of conoco and BP because they're chesapeake might be down here at the way to go if you're betting on a natural gas comek bah. Let's check in with the man our good friend, aubrey mclenon.
Mad Money
1/29/2009 6:28 PM
Mad Money
Of undeveloped acreage in the anadarko basin for 412 million. It's still trying to sell the south texas assets and the midstream business for a billion dollars and plus the joint venture with BP that we like so much that will give chesapeake 1.9 billion smackers. The company's business update was fairly positive. Chesapeake's reserves 12.1 cubic
Mad Money
1/29/2009 6:23 PM
Mad Money
I like more of the dividend, but he gets the low cost producer. If you're looking to buy oil and gas I want you to consider conoco, cop, and I want you to consider BP, which is BP, and I want you to consider aubrey mcclendon who is from chesapeake and blow right with us. >> I think that's on the other side of tv.
Mad Money
1/29/2009 6:20 PM
Mad Money
The region. It should not be confirmed with the region, and much too good for the cheap linoleum floor. >> BP will now have a 25% interest in chesapeake's properties. Owning 135,000 net acres and given 25% of the leases and chesapeake acquires in the future and maybe the best way to play chesapeake, this could hurt. BP, and this management has been focused on improving the profitability by reducing cost. They report next week tuesday, february 3rd and we, the royal we expect to see 6% production growth above the group's average. BP trades at a 10% discount to it should catch up and it delivers higher margins and keeps up the juicy dividend. Bottom line, this group's coming down and exxon's going to be bad, for oil and natural gas, we
Mad Money
1/29/2009 6:19 PM
Mad Money
>> b but it does give you a 6% >> that was easy. >> a stock that's paying you practically a fortune just to sit well and own it it, well, then the oil and goes play for you is BP, formerly british it is a 7.8% yield and management endorsed the dividend and given BP's cash flow, i'm want worried that they'll slice it. Like conoco, BP has a past ease, if not a mosaic of diverse businesses and it's trying to become more diversified. It is tied to oil, but last --
Mad Money
1/29/2009 6:17 PM
Mad Money
They alienated the younger demographic after dick van dyke. No one's ever hoard of those where does this leave us? I have two high--year-old integrated oils and conoco with the yield and BP for its large and in charge.8% yield. I like these two stocks so much that my charitable stocks owned I justa added to my positions and that's the strongest
Power Lunch
1/29/2009 12:39 PM
Power Lunch
>> we have steel workers that are in this labor dispute with a lot of major oil companies, club BP and exxonmobil. There's a chance they could strike if an agreement is not reached by saturday. Exxon will continue to keep their plans open, shell has done BP says they could shut four or that's about a 1.3 million barrels a day of oil that's we could see an impact.
Squawk On The Street
1/29/2009 10:10 AM
Squawk On The Street
$40 barrel level? The key level that the most desirable level for many in the desirable level for many in industry is between $60 and '80. That's what BP's ceo tony heyward says is the level to really get investment going. What we're seeing is a number of projects being canceled or slowed down. And a lot of companies saying they're going to cut back on
Squawk On The Street
1/29/2009 9:35 AM
Squawk On The Street
Cutting back on production. We have royal dutch shell announcing that it has had the lowest earnings we've seen in ten years here because of lower oil prices. And also, BP talking about perhaps shutting some refineries here in the u.S. Rick san tell, over to you in
Money For Breakfast
1/29/2009 8:26 AM
Money For Breakfast
Drop in oil prices, of course. Total revenue also falling 24 percent. Shell down about, well, flat. We'll call it flat in trading. BP down also half a percent. Euro zone business and consumer confidence hitting record lows as the renal continues to strug -- region continues to also a warning from the top oil
Money For Breakfast
1/29/2009 7:29 AM
Money For Breakfast
That is thanks to a drop in oil prices. Total revenue also falling 24%, but they still managed to squeak out $81 billion. Shell stock price right now up a quarter of a percent in BP down half a percent. There is also a warning from some of the top oil chiefs. They say cutting investment in future projects because of the current economic downturn could have dire consequences.
Money For Breakfast
1/5/2009 7:26 AM
Money For Breakfast
The lead in acting to shore up sagging oil prices. Crude prices by the way are higher today. That is giving a boost to the oil stocks, but even here we're being a little mixed. BP up 1 1/2% in london. But royal dutch shell down 2%. Also seen money coming out of gold, down 17% in london -- $17 -- $17 that is per ounce in london trading. Mining stocks doing okay but
View All BP PLC - Shs American Deposit.Receipt Repr.6 Shares Comments

Key Fundamentals

BP - BP PLC - Shs American Deposit.Receipt Repr.6 Shares Fundamentals
Price (2/6/2009) $45.54
Volume (2/6/2009) 7.2 Million
10 Day Average Volume 7.7 Million
13 Week Price Range $38.92 - $50.38
52 Week Price Range $37.57 - $77.69
LTM Revenue $347.7 Billion
 
Shares Outstanding (12/2007) 3.1 Billion
Market Capitalization $143.1 Billion
Shares Held By Institutions 377.8 Million
Institutional Holders 1,054
% Shares Held By Institutions 12.10%
Earnings Per Share (EPS) $6.47
P/E Ratio 5.60
Book Value Per Share $33.54
 
Gross Margin 20.60%
Quarterly Dividend 3.36
Dividend Yield 7.40%
Beta 0.67
Fiscal Year Ends December