Tuesday, March 7, 2017

Analysis of BP 2017


BP, a British oil giant

ISIN GB0007980591 | WKN 850517 

Business: A British oil giant. They are divided into two business units which are: Upstream (extracting gas and oil) and Downstream (fuels, lubricants and petrochemicals). They currently have five brands: BP(oil and gas), Aral (gas stations where I buy all my petrol), Castrol (lubricants), ampm (convenience stores) and Wild Bean Café (cafés). 

Active: 80 countries world wide employing around 84,000 people (they still claim this on their homepage)

P/E: 

Here you can find the previous analysis of BP 2016.


Contrarian analysis of BP 2017

The P/E of BP is silly due to the crazy low earnings and are therefore 970. The P/B is however very good with 1.2 however it starts to increase with a dramatic speed. This of course give a total value that Graham would not have liked. Earnings to sales and ROE is useless to speak of but the book to debt is at 0.6 which is only so, so. 
Due to many, many different reasons the revenue from BP have dropped like a stone which today means that in the last five years they have had a yearly revenue drop of -13% per year. This gives us a motivated P/E of 8.
They still pay a dividend of 7% which is insane. They should stop this to sort out their business because each year they are eating up their money for moving forward.

Conclusion: Graham says very clearly no to BP. Based on the figures it is, as it has for a long time now, not looking healthy. All the values are bad besides from P/B however that one is falling quickly. I will remain as a grumpy shareholder.

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