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BP Q3 Earnings: Is a Beat in Store for the Stock Again?

Oil giant BP plc BP is expected to report third-quarter 2017 earnings on Oct 31, before the opening bell.

Last quarter, the company delivered a positive earnings surprise of 90.91%. In the last four quarters, the company’s average earnings surprise was a positive 32.39%. Let’s see how things are shaping up for this announcement.  

Which Way are Estimates Treading?

Let’s look at the estimate revisions in order to get a clear picture of what analysts are thinking about the company before earnings release.

The Zacks Consensus Estimate of 43 cents for the third quarter has been stable in the last thirty days. It reflects year-over-year growth of 41.67%.

BP p.l.c. Price and EPS Surprise


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

Factors to Consider This Past Quarter

Recently, BP has appraised its exploration portfolio. Therein, the company reiterated that it is refocusing on growth in natural gas and advantaged oil in regions where it presently functions. The company is also seeking prospects to develop new production regions while abandoning less competitive exploration deposits. These initiatives are likely to support the company with growing and sustainable free cashflows, which it can distribute among shareholders. This is likely to impact BP’s quarterly results.

As compared with the year-earlier quarter, pricing environment for both oil and natural has improved. This should prove favorable for the company’s upstream business as the commodities produced could be sold at higher prices.

BP projects flat sequential production and refining margin. Hence, both upstream and downstream operations look favorable. However, maintenance works and seasonal turnaround activities may limit the upside.

Q3 Price Performance

BP’s shares have returned 10.9% in the third quarter, compared with the 9.5% increase of its industry.

What Our Model Indicates

Our proven model shows that BP is likely to beat on earnings this time because it has the right combination of two key ingredients.  

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +12.94%. This is because the Most Accurate estimate is pegged at 48 cents, while the Zacks Consensus Estimate is at 43 cents. 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 #3 (Hold). Note that stocks with Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating on earnings. The combination of Phillip 66’s favorable Zacks Rank and Earnings ESP makes us confident about an earnings beat.

Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

Other Stocks to Consider

Here are some firms that you may want to consider on the basis of our model. These have the right combination of elements to beat earnings this quarter.

Noble Midstream Partners LP NBLX, headquartered in Houston, TX, has diversified energy infrastructure properties. The company has an Earnings ESP of +1.91% and boasts a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Canadian Natural Resources Limited CNQ, based in Austin, TX, is an independent oil and gas company. The company has an Earnings ESP of +7.46% and boasts a Zacks Rank #2.

Tesoro Corporation ANDV, based in San Antonio, TX, operates as the refiner and marketer of petroleum products. The company has an Earnings ESP of +5.02% and carries a Zacks Rank #3.

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