Factors to Pay Attention to Ahead of BP's Q3 Earnings Release

BP plc BP is set to report third-quarter 2019 results on Oct 29.

Let’s see how things are shaping up prior to the announcement.

Which Way are Estimates Headed?

Let’s take a look at the estimate revision trend to get a clear picture of what analysts feel about the company prior to the upcoming earnings release.

The Zacks Consensus Estimate for third-quarter earnings of 53 cents has seen no upward revision and three downward movements in the past 30 days. The figure suggests a year-over-year decline of 54%.

Further, the Zacks Consensus Estimate for revenues is pegged at $78.9 billion for the quarter, indicating a decline of 2.4% from the year-ago reported figure.

Factors to Consider

The crude pricing scenario through the September quarter of 2019 weakened year over year, acting as a major drag on BP’s upstream operations. Moreover, the company expects maintenance activities and seasonal turnaround to have hurt its third-quarter production. The integrated energy player also said that its upstream operations in the U.S. Gulf of Mexico were affected by Hurricane Barry in the quarter.

Weak oil prices have likely favored BP’s downstream business since the company could purchase raw crude at lower prices to produce refined petroleum products. However, lower demand for the company’s end products, owing to a slowdown in global economy, has probably hurt the company’s refining operations. 

Earnings Whispers

Our proven model does not indicate an earnings beat for BP. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases chances of an earnings beat. That is not the case here as you will see below.

Earnings ESP: The company’s Earnings ESP is 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 53 cents per share. 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.

Highlights of Q2 Earnings & Earnings History

In the last reported quarter, BP delivered earnings of 83 cents per share that surpassed the Zacks Consensus Estimate of 78 cents. However, quarterly earnings declined from the year-ago figure of 85 cents.

Notably, the British energy giant surpassed the Zacks Consensus Estimate in each of the last four quarters, the average positive earnings surprise being 19.1%, as shown in the chart below.

BP p.l.c. Price and EPS Surprise

BP p.l.c. price-eps-surprise | BP p.l.c. Quote

Stocks That Warrant a Look

Though an earnings beat looks uncertain for BP, here are a few firms that you may want to consider on the basis of our model. These have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

Phillips 66 PSX has an Earnings ESP of +4.50% and a Zacks Rank of 3. The leading refiner is scheduled to release earnings on Oct 25. You can see the complete list of today’s Zacks #1 Rank stocks here. 

Pioneer Natural Resources Company PXD has an Earnings ESP of +2.34% and is Zacks #3 Ranked. The upstream energy firm is set to release earnings on Nov 4.

The Williams Companies, Inc. WMB has an Earnings ESP of + 1.63% and is a #3 Ranked stock. The midstream service provider is scheduled to release earnings on Oct 30.

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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.