Is BP plc (BP) Poised to Beat Earnings Estimates? - Analyst Blog

BP plc BP is set to report first quarter 2014 results on Apr 29, before the market opens. Last quarter, the company had posted an earnings surprise of -1.10%. Let's see how things are shaping up for this announcement.

A Likely Positive Surprise

Our proven model shows that BP is likely to beat earnings because it has the right combination of two key ingredients.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is at +0.91%. This is a very meaningful and leading indicator of a likely positive earnings surprise.

Zacks Rank: BP currently holds a Zacks Rank #3 (Hold). Note that stocks with Zacks Ranks #1 (Strong Buy), 2 (Buy) and 3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.  

The combination of BP's Zacks Rank #3 and +0.91% ESP makes us confident of an earnings beat.

Factors Driving Better-than-Expected Results This Quarter

British energy giant, BP witnessed sluggish numbers in fourth quarter 2013 owing to depressed downstream operations and lower liquid realizations. In that quarter, adjusted earnings of 90 cents per American Depositary Share fell a penny short of the Zacks Consensus Estimate and decreased 25.6% from $1.21 earned a year ago.
 
However, we expect this trend to buck in the first quarter with refining margins improving from the low level as witnessed in the fourth quarter. Apart from that, increased exposure to heavy crude differentials in the U.S. as the company ramps up its heavy crude processing at the Whiting refinery would also lead to recovery.

On the flip side, production for the first quarter would go downhill owing to the expiry of Abu Dhabi onshore concession and divestments.  

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Pioneer Energy Services Corp. PES has an earnings ESP of +40.00% and holds a Zacks Rank #1. Pioneer Energy Services Partners will report first quarter earnings on Apr 29.

Phillips 66 Partners L.P. PSXP has an earnings ESP of +14.82% and holds a Zacks Rank #1. Phillips 66 Partners will report first quarter earnings on Apr 30.

Unit Corp. UNT has an earnings ESP of +1.80% and holds a Zacks Rank #1. Unit Corp. will report first quarter earnings on May 8.