Bear of the Day: BP PLC (BP)

You’d think that will all of us running to the gas station a few times a week, that energy companies would be raking in the cash. It should make the whole sector a slam dunk, especially with attractive yields. However, that simply hasn’t been the case for many of these stocks. The drag of lower oil prices has been putting some pressure on these stocks. These include today’s Bear of the Day, BP PLC (BP).

BP has long tried to rebrand itself as a cleaner, greener energy company. Admirable, sure—but the market isn’t rewarding ESG lip service when it comes at the expense of operational focus. While peers like Exxon and Chevron are doubling down on efficient fossil fuel production, BP has been pivoting toward renewables with mixed results. The problem? That transition isn't cheap, and it’s dragging on margins.

The most glaring issue here is earnings estimate revisions. Over the last 60 days, eight analysts have slashed their forecasts for the current fiscal year. The Zacks Consensus Estimate for the current year is now down to $2.38 from $3.53. That kind of downward pressure is the kiss of death for a stock in our ranking model, pushing BP into the dreaded Zacks Rank #5 (Strong Sell) territory.

The yield is still nice though at 6.51%. There are other stocks within the Oil and Gas – Integrated – International Peers industry which are in the good graces of our Zacks Industry Rank. There are many names which are Zacks Rank #3 (Hold) stocks as well. These include Exxon Mobil (XOM) and Shell (SHEL).

Only $1 to See All Zacks' Buys and Sells

We're not kidding.

Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.

Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

Source Zacks-com