July 28, 2015
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VALUATION WATCH: Overvalued stocks now make up 47.96% of our stocks assigned a valuation and 17.49% of those equities are calculated to be overvalued by 20% or more. Nine sectors are calculated to be overvalued--with two at or near double digits.
--We're Sorry... Really Sorry (AGAIN!)
BP Posts Massive Loss
BP p.l.c. is the holding company of one of the world's largest petroleum and petrochemicals groups. Their main activities are exploration and production of crude oil and natural gas; refining, marketing, supply and transportation; and manufacturing and marketing of petrochemicals. They have a growing activity in gas and power and in solar power generation. BP has well-established operations in Europe, North and South America, Australasia and Africa.
BP posted its first results since the announcement of their massive Deepwater Horizon settlement a few weeks ago. As we noted at the time, the 2010 spill was a disaster for the Gulf and BP's reputation, exposing lax safety practices and a seeming lack of concern on the part of the firm and CEO
Tony Hayward. Hayward's legendary "Sorry" speech, which was a PR disaster, led to his widespread ridicule and eventual resignation.
"Sorry" BP CEO Hayward, As Skewered by TV's "Southpark"
Today, the company reported a loss in excess of $6 billion due to lower oil prices and the massive hit to the bottom line from the settlement. The company tried to spin this as a good thing, as "paying the piper" removes uncertainty related to the spill moving forward. BP no longer has claims pending from the US government or the five Gulf states effected by the massive oil spill.
According to the Wall Street Journal, the total cost of the spill to the company has now exceeded $55 billion and the company had to sell off @$40 billion in assets to deal with the disaster. BP plans to continue to shed assets to pay off clean up costs and legal fees. While the major lawsuits were settled earlier this month, they still have to meet pay out schedules in excess of $18 billion for the next 18 years.
BP reported earnings of $0.43/share, which missed estimates of $0.48/share by five cents. Company net income came in at $1.3 billion, which was a miss of analyst estimates for $1.64 billion--and well below last year's figure of $3.6 billion. Despite the lower profits, the company will keep its dividend of $ 0.10/share.
And, the company's issues are not purely spill related. BP is the first big company to report this quarter, and analysts are waiting to see how its rivals fare. That should give a good indication of how big oil is going to fare with current crude prices.
Crude oil is down yet again, despite a recent recovery. Today, the commodity was trading at @$53/barrel, down from recent prices in the high $60/barrel range--and from significantly hire prices in the $110/barrel range a year ago.
Current BP Group Chief Bob Dudley noted that “in the past few weeks oil prices have fallen back in response to continued oversupply and market weakness and the recent agreements regarding Iran. I am confident that positioning BP for a period of weaker prices is the right course to take, and will serve the company well for the future.”
Supply is way ahead of demand currently, as the US energy boom has challenged OPEC supremacy. We also could see slowing demand from China and an increase in supply when Iranian sanctions are removed and that nation brings oil to market in an unfettered way once again.
Below is today's more extensive data on BP:
VALUENGINE RECOMMENDATION: ValuEngine continues its HOLD recommendation on BP PLC for 2015-07-27. Based on the information we have gathered and our resulting research, we feel that BP PLC has the probability to ROUGHLY MATCH average market performance for the next year. The company exhibits ATTRACTIVE Company Size but UNATTRACTIVE Earnings Growth Rate.
ValuEngine Forecast |
|
Target
Price* |
Expected
Return |
1-Month |
36.17 |
0.33% |
3-Month |
36.89 |
2.32% |
6-Month |
37.33 |
3.54% |
1-Year |
37.46 |
3.90% |
2-Year |
35.27 |
-2.17% |
3-Year |
41.22 |
14.35% |
Valuation & Rankings |
Valuation |
6.57% undervalued |
|
61 |
1-M Forecast Return |
0.33% |
1-M Forecast Return Rank |
75 |
12-M Return |
-28.81% |
|
30 |
Sharpe Ratio |
0.24 |
|
58 |
5-Y Avg Annual Return |
6.49% |
5-Y Avg Annual Rtn Rank |
58 |
Volatility |
27.11% |
|
64 |
Expected EPS Growth |
-38.98% |
|
9 |
Market Cap (billions) |
109.56 |
Size Rank |
100 |
Trailing P/E Ratio |
11.52 |
|
87 |
Forward P/E Ratio |
18.87 |
Forward P/E Ratio Rank |
36 |
PEG Ratio |
n/a |
PEG Ratio Rank |
n/a |
Price/Sales |
0.34 |
|
88 |
Market/Book |
1.39 |
|
64 |
Beta |
1.70 |
Beta Rank |
19 |
Alpha |
-0.36 |
Alpha Rank |
21 |
As a bonus to our Newsletter readers,
we are offering a FREE DOWNLOAD of one of our Stock Reports
Read our Complete Detailed Valuation Report on BP HERE.
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The ValuEngine View Newsletter is the product of a sophisticated stock valuation model that was first developed by ValuEngine's academic research team. It utilizes a three factor approach: fundamental variables such as a company's trailing 12-month Earnings-Per-Share (EPS), the analyst consensus estimate of the company's future 12-month EPS, and the 30-year Treasury yield are all used to create a more accurate reflection of a company's fair value. A total of eleven additional firm specific variables are also used. In addition, the portoflio uses top picks from our Forecast Model. In essence, the portfolio is constructed with the best picks from our main propiretary models
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VE View vs. S&P 500 Index Past Five Years |
|
VE View |
S&P 500 |
Ann Return |
19.75% |
14.13% |
Ann Volatility |
21.06% |
11.13% |
Sharpe Ratio |
0.94 |
1.27 |
Sortino Ratio |
1.55 |
1.56 |
Max Drawdown |
-34.94% |
-11.14% |
The ValuEngine View Newsletter is derived from the ValuEngine Aggressive and Diversified Growth BenchmarkPortfolio Strategies. These strategies are the product of ValuEngine's academic research team and combine cutting-edge financial analysis and portfolio construction techniques with real-world Wall St. know how.
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The ValuEngine View Newsletter portfolio has 15 primary stock picks and five alternates and is re-balanced once each month. The ValuEngine View Newsletter is published near the middle of each calendar month. An equal amount of capital is allocated to each stock. The monthly returns are calculated from the closing prices on date of publication. The performance calculation does not include any transaction costs.
ValuEngine Market Overview
Summary of VE Stock Universe |
Stocks Undervalued |
52.04% |
Stocks Overvalued |
47.96% |
Stocks Undervalued by 20% |
21.51% |
Stocks Overvalued by 20% |
17.49% |
ValuEngine Sector Overview
|
|
|
|
|
|
|
|
-1.09% |
-0.99% |
14.76% |
17.22% overvalued |
15.58% |
30.10 |
|
-1.51% |
-3.20% |
2.01% |
12.32% overvalued |
-3.86% |
19.82 |
|
-0.88% |
-2.85% |
0.36% |
7.60% overvalued |
-1.27% |
22.19 |
|
-1.27% |
-2.90% |
5.20% |
4.47% overvalued |
-2.29% |
28.55 |
|
-0.59% |
-4.24% |
-1.84% |
3.80% overvalued |
-7.46% |
24.82 |
|
-1.07% |
-3.48% |
1.42% |
3.36% overvalued |
-3.77% |
23.88 |
|
-0.68% |
-1.77% |
1.13% |
3.09% overvalued |
-1.59% |
17.41 |
|
-1.34% |
-3.75% |
-3.11% |
2.99% overvalued |
2.67% |
25.55 |
|
-1.09% |
-5.57% |
-1.23% |
2.64% overvalued |
-2.13% |
29.30 |
|
-0.15% |
-3.17% |
-3.56% |
1.76% undervalued |
-8.24% |
20.24 |
|
-1.08% |
-3.72% |
-5.38% |
3.42% undervalued |
-5.32% |
17.53 |
|
-1.36% |
-5.27% |
-4.19% |
4.79% undervalued |
-12.38% |
15.54 |
|
-1.36% |
-3.59% |
-1.31% |
5.21% undervalued |
-2.16% |
23.54 |
|
-1.18% |
-6.69% |
-3.23% |
7.80% undervalued |
-8.63% |
18.85 |
|
-2.17% |
-14.36% |
-14.94% |
16.79% undervalued |
-46.83% |
21.23 |
|
-1.83% |
-12.04% |
-13.10% |
21.45% undervalued |
-37.29% |
22.47 |
ValuEngine.com Products and Services
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