Markets

BP Slips to 52-Week Low on Persistent Fall in Crude Prices

On Sep 28, 2015, shares of BP plcBP fell almost 4% on NYSE to touch a 52-week low of $29.35. Finally, the shares closed the session at $29.38.

This drop in price continues the ongoing downtrend for BP as the energy major has lost about 11% over the past month and is down nearly 23% year to date.

What Led to the Share Price Decline?

BP's financials are likely to remain under pressure due to the persistently weak commodity pricing environment. The company's oil exposure aggravates bearishness on the stock as the commodity is now hovering around $44 per barrel. The recent fluctuation in U.S. equity prices, along with weak Chinese economic data has put pressure on crude prices.

In particular, Chinese growth worries have flared up fears about a drop in oil demand from that country. This also prompted investors to reduce their exposure to oil and the related support plays. Investor pessimism was also triggered after New York Federal Reserve President William Dudley hinted at the possibility of raising interest rates.

The current scenario does not favor Europe's third-largest oil company BP, which reported lackluster second-quarter 2015 results. Earnings per ADS of 43 cents fell short of the Zacks Consensus Estimate of 55 cents and declined from the year-ago earnings of $1.18. Revenues also dropped 35.5% year over year to $61.8 billion and were well below our estimate of $95.8 billion.

BP expects third-quarter 2015 production to be broadly flat with the second quarter, after accounting for seasonal maintenance activity. The company also projects reduced refining margins and lower levels of turnaround activity.

Currently, BP carries a Zacks Rank #5 (Strong Sell).

Stocks that Warrant a Look

Some better-ranked stocks in the energy space are Alon USA Partners, LP ALDW , Braskem S.A. BAK and ReneSola Ltd SOL . Each of these stocks sports a Zacks Rank #1 (Strong Buy).

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BP PLC (BP): Free Stock Analysis Report

RENESOLA LT-ADR (SOL): Free Stock Analysis Report

BRASKEM SA (BAK): Free Stock Analysis Report

ALON USA PTNRS (ALDW): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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