We look at BP p.l.c. (NYSE:BP) a company in the Major Integrated Oil & Gas industry which lately stock market players have been interested in, to assess if it provides value for investors considering buying or selling it. Currently BP is trading at $32.20 after moving up 0.19% in the previous day of trading.
BP is trading with a trailing 12 month P/E multiple of 35.38 and an estimated forward P/E multiple of 13.24. The stock has an estimated 5 year annual growth of 8.31% and a PEG multiple of 4.26.
Rather than the usual Price to Earnings (P/E) multiple method, we use a slightly different method to assess if BP is potentially a value buy for investors, the PEG ratio (P/E to growth). This PEG multiple takes into account the expected long term growth in earnings of the company rather than merely the growth for one earnings period ahead as forward P/E does.
That is to say, P/E simply doesn’t account for the long term prospects of BP. As a rule of thumb, a stock with a PEG of between 0 and 1 is usually considered to be underpriced, between 1 and 2 to be at fair value and over 2 to be overpriced. Based on the PEG ratio of BP being 4.26, we consider BP to likely be overpriced.
This analysis means that value buyers who do not currently hold BP p.l.c. (NYSE:BP) should not consider buying and investors currently holding the stock should consider selling.
The mean analyst 12 month target price for BP (NYSE:BP) is currently $41.21 or 27.98% above the current price. Additionally, the stock has been as high as $48.11 and as low as $30.53 in the last 52 weeks. Analysts are estimating that BP will report earnings per share of $0.29 next quarter.
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