The City’s Latest Forecasts For BP plc

It’s always worth keeping an eye on the earnings forecasts for your favourite companies, especially if you use forward P/E ratios to gauge when to buy and sell your shares.

You never know, if City brokers have been revising their projections of late, your investments may not be as cheap — or expensive — as you think!

Today I’m looking at the earnings per share (EPS) forecasts for BP (LSE: BP) (NYSE: BP.US), the FTSE 100 oil and gas giant. All my figures are courtesy of S&P Capital IQ.

The consensus for 2013 is for underlying EPS of $0.78, which puts the 441p shares on a low forward P/E of 8.8.

However, the estimates suggest earnings may rally to $0.91 per share for 2014 and advance further to $0.93 for 2015, at least according to City analysts.

The latter projection places the shares on a P/E of 7.6.

The data from S&P Capital IQ also indicates total revenue at BP may come in at around $349bn and $345bn during 2013 and 2014 respectively, which compares to more than $370bn for 2012.  However, EBITDA is predicted to rise throughout 2013 and 2014, from $39.6bn in 2012, to $41bn and then $42bn.

All told, the forecasts don’t seem to be particularly extravagant, but with the near-term P/E of 8.8, it looks as if the market isn’t expecting earnings to advance quickly anytime soon.

Whether these projections make BP a buy, a hold or a sell is of course something only you can decide. To put the company’s multiple into perspective, the FTSE 100 at 6,441 trades on a P/E of 14.7.

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>  Chris does not own any share mentioned in this article.