BP full-year results – how will they affect the share price?

BP has seen its shares struggle in 2019, but with strong cash flow and an attractive valuation, will this change in 2020?

When is BP’s earnings date?

BP reports Q4 and full-year earnings on 4 February.

BP earnings – what does the City expect?

BP is expected to report pre-tax profit of $15.06 billion, down from the $20.9 billion a year earlier. Revenue is expected to fall 7% to $277.8 billion.

Despite a year of volatility, which saw US crude hit $65.00 twice, oil prices are close to where they were a year earlier. But even with oil failing to hold its gains, BP has been able to report strong growth in profits, boosting investor confidence, while at the same time maintaining its dividend and even embarking on a $1.6 billion share buyback scheme.

While leverage at the group will remain relatively elevated (net debt in Q3 was above forecasts), BP is using the funds to power expansion in a number of projects which will help provide diversification in the years to come. Crucially, cash flow remains healthy, providing little concern about debt repayments, and thus leaves room for further dividend increases and buyback programmes.

How to trade BP’s earnings

BP trades at 11.5 times forecast earnings, a figure that has changed little since late 2018. This is well below the five year average of 15 times, with BP having remained ‘cheap’ on this basis for almost two years. Combined with a 6.5% yield, BP would appear to have compelling attractions for both income investors and those looking for growth ‘at a reasonable price’.

Meanwhile, for technical traders, the 14-day average true range of BP shares has fallen since November, from 10.5 to around eight. This reduction in intraday volatility may allow for tighter stop losses and larger position sizes, provided risk management is carefully employed.

The average move on results day is 2.95%, while current options pricing points to a move of 3%. It is worth noting that the shares fell 4.3% on the release of Q3 results on 29 October.

BP shares – technical analysis

BP rallied steadily from the beginning of 2016, but the charge higher stalled in 2019. Since mid-2018, the 550p area has marked resistance. More worryingly for bullish investors is the sequence of lower highs and lower lows in place since April last year – each rally in BP has petered out at a lower level, building a bearish dynamic that has proven hard to shift. The one consolation is that the 460p level continues to hold as support – it was tested in December 2018 and then again almost a year later.

It is possible that the share price has created a higher low at 475p in January 2020, but we will need to see the sequence of lower highs breached to provide a more bullish view – thus the shares need to move back above 510p. A break of 460p would be worrying and could bring 420p into play, lows last tested in Q1 2018.

Arguably, BP shares have been in a two-year consolidation period after their two-year rally. However, we have yet to see this consolidation end, so the time is not yet ripe for outright bullishness.

BP gets two stars out of three

BP possesses an attractive dividend and a compelling valuation, founded upon solid cashflow. This will be enough to convince many fundamental investors, but those looking at charts will want to see the third piece of the puzzle, a revived uptrend, fall into place. This may happen this year, but the run of lower highs needs to be brought to an end first.


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

See opportunity on a stock?

Don’t miss your chance. Try a risk-free trade in your demo account, and find out whether your hunch could have paid off.

  • Log in to your demo
  • Try a risk-free trade
  • See whether your hunch pays off

See opportunity on a stock?

Don’t miss your chance. Upgrade to a live account to take advantage.

  • Trade a wide range of popular global stocks
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform, when it matters

See opportunity on a stock?

Don’t miss your chance. Log in to take advantage while conditions prevail.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Sell
Buy
-
-
-
-
-
-
-
-
-
-
Sell
Buy
Sell
Buy
-
-
China 300
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Sunday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.


For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of spread betting and CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.