BP (British Petroleum): (I thought this would be an interesting comparison to the solar companies I've been evaluating.)
PE = 8
PE range 5 to 20 (last 5 years)
Earnings and stock trend with oil price.
dividend yield = 6.6% = $3.36/51 (payout ratio is 64%)
gross margins, 5 year average: 21%
share count has been slowly declining, from 21.4B end-2005 to 18.9B end-2009
cash/share $3.90
LT debt/share $7.60
Stock now at 51$. Troughed at $35 in 2003 and 2009, all-time hi $80 in 2007.
BP has plenty of liquidity and very little gearing. At the end of March, according to FactSet data, it had $70 billion in current assets, including cash, receivables and inventory, to set against $62 billion in short-term liabilities and $24 billion in long-term debt. Pretax income last year was $21 billion on sales of $241 billion. BP stock is valued at about 0.6 times sales, according to FactSet data. The figures for ExxonMobil and Chevron are about 1 times sales. BP is about 5 times annual cashflow–compared to 8.5 times for Chevron and 9.6 times for Exxon. online.wsj.com
Hold Your Nose and Buy BP: shares are off nearly 20% since their Deepwater Horizon drilling rig exploded April 21st. That's around $30b in market cap wiped out in 2 weeks. seekingalpha.com
BP threw just about everything it had at the Gulf of Mexico once it became clear last week that oil leaking from a wrecked drilling rig threatened to cause an environmental catastrophe. So far, the company appears to be winning the battle to stop the oil seriously contaminating the shore, but it’s losing the PR war hands down. When the White House boasts that it will “keep a boot to the throat” of your company, and “Daily Show” host Jon Stewart is cracking jokes about you in which the punch line is “Goldman Sachs,” you know you’ve got an image problem. blogs.wsj.com
Credit rating agency Moody's said Wednesday it has revised the outlook on BP PLC's (BP) credit rating to negative from stable on the possibility that the company may incur large financial liabilities cleaning up the oil spill in the Gulf of Mexico.
"It remains impossible at this stage to assess the full extent of the costs and business impact of this accident on BP," said Moody's in a statement.
"While BP's current financial position, which has recently benefited from robust operating results and cash flow generation underpinned by the recovery in oil prices, provides some cushion against the potential financial impact of the incident, Moody's believes that it is too early to exclude scenarios leading to downward pressure on the Aa1 rating," it said.
BP is already incurring costs of at least $6 million a day to contain the oil spill and will probably pay another $200 million to drill relief wells to halt the flow of oil from a damaged well.
If the oil spill results in significant contamination to the coast of the Gulf of Mexico, which has so far not been the case, analysts say BP's liability could be anywhere between $2 billion and $8 billion. BP does not carry insurance that would cover the Gulf of Mexico spill.
online.wsj.com |
