BP Gears Up to Report Q2 Earnings: What's in the Cards?

BP plc BP is expected to report second-quarter 2018 earnings on Jul 31, before the opening bell.

Last quarter, the company delivered a positive earnings surprise of 16.4%. BP managed to beat the Zacks Consensus Estimate in three of the last four quarters, the average positive surprise being 29.6%. Let’s see how things are shaping up for this announcement.

Factors to Consider This Past Quarter

Per the U.S. Energy Information Administration (EIA), the average West Texas Intermediate (WTI) crude prices for the month of April, May and June of 2018 were recorded at a respective $66.25 per barrel, $69.98 and $67.87, significantly higher than the year-ago monthly prices of $51.06, $48.48 and $45.18.

Notably, the average monthly crude pricing scenario through second-quarter 2018 was the healthiest in three years. Supply concerns emanating from Venezuela and Iran amid robust domestic economy were constantly backing oil prices.

The improvement in the oil price has been favorable for BP’s upstream businesses. However, through the April-to-June quarter of 2018, the company expects production to decline sequentially, dampening the profit potential of upstream businesses.

BP also announced expectations that despite a remarkable turnaround works, the overall refining margin for the industry will likely be seasonally higher.

What Our Model Indicates

Our proven model does not conclusively show a beat for BP this earnings season. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates. That is not the case here as you will see below. 

Earnings ESP: Earnings ESP for the company is 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 85 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. 

Zacks Rank: BP has a Zacks Rank #2, which increases the predictive power of ESP. But we also need a positive ESP to be confident of a beat.

Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revision.

Stocks to Consider

Here are some companies from the energy sector which, according to our model, have the right combination of elements to post an earnings beat this quarter: 

Murphy Oil Corporation MUR has an Earnings ESP of +5.99% and a Zacks Rank #2. The company is anticipated to release earnings on Aug 8. You can see the complete list of today’s Zacks #1 Rank stocks here.

Jones Energy, Inc. JONE has an Earnings ESP of +13.97% and a Zacks Rank #3. The firm is expected to release earnings on Aug 2.

Houston, TX-based EOG Resources, Inc EOG is a major independent oil and gas exploration and production player. The company has an Earnings ESP of +2.02% and a Zacks Rank #3.

BP p.l.c. Price and EPS Surprise

 

BP p.l.c. Price and EPS Surprise | BP p.l.c. Quote

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BP p.l.c. (BP) : Free Stock Analysis Report
 
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