BP plcBP is set to report third-quarter 2026 results on Oct. 30.
The Zacks Consensus Estimate for third-quarter earnings is pegged at $2.66 per share, implying a surge of 212.9% from the year-ago reported number. It has witnessed one upward estimate revision in the past seven days. The Zacks Consensus Estimate for third-quarter revenues is currently pegged at $66.2 billion, suggesting a 34.4% rise from the year-ago actuals.
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BP beat the consensus estimate for earnings in each of the trailing four quarters, with the average surprise being 17.9%. This is depicted in the graph below:
Q3 Earnings Whispers for BP
Our proven model predicts an earnings beat for BP this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an earnings beat. That is the case here.
The leading integrated energy player has an Earnings ESP of +7.13%. BP currently sports a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here.
You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Factors to Watch Ahead of BP's Earnings
To understand how oil prices behaved in the September quarter, let's analyze the commodity prices from the data provided by the U.S. Energy Information Administration ("EIA"). The average Europe Brent spot prices for July, August and September of this year were $83.76 per barrel, $91.08 per barrel and $114.16 per barrel, respectively, per EIA data. Commodity prices were $71.04 per barrel, $67.87 per barrel and $67.99 per barrel in the prior-year respective months, according to the EIA.
A constructive oil-price backdrop, driven by the Iran war, aided the company's exploration and production businesses in the September quarter of this year, similar to ExxonMobil Holdings CorporationXOM and Chevron CorporationCVX.
BP's Price Performance & Valuation
BP's stock has jumped 42% over the past year, underperforming the industry's 54.6% surge. XOM has gained 56.4% over the same period, while Chevron rallied 48%.
One-Year Price Chart
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While BP's stock price has underperformed the industry, the company appears relatively cheap. The company's current trailing 12-month enterprise value/earnings before interest, tax, depreciation and amortization (EV/EBITDA) is 3.12x, reflecting that it is trading at a discount compared with the industry average of 6.60x. XOM and CVX are valued higher at 10.01x and 8.55x, respectively.
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Investment Thesis of BP
The price of West Texas Intermediate ("WTI") crude is trading above $100 per barrel. The high price is being backed by ongoing tensions in the Middle East. EIA in its latest short-term energy outlook projected WTI at $88.21 per barrel this year, higher than $65.40 in 2025. A highly favorable pricing environment for the commodity is likely to continue supporting BP's exploration and production activities, which derive a significant proportion of its earnings, similar to ExxonMobil and Chevron.
The British energy major's production outlook seems bright, thanks to its major projects, expected to begin operations between 2028 and 2030, are moving forward as planned. Once operational, these projects could help BP increase production and generate more cash.
Moreover, BP is working to improve its refining business by making better use of its refineries, trading operations and customer networks. The British energy giant benefits from its ability to buy crude oil from different markets and sell refined products where demand is stronger.
Last Word
Given the overall favorable business outlook, investors may want to bet on the British integrated energy giant ahead of earnings, considering its undervaluation.
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BP p.l.c. (BP) : Free Stock Analysis Report
Chevron Corporation (CVX) : Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).
