Factors To Pay Attention To Ahead Of BP's Q3 Earnings Release

BP plc (BP - Free Report) is set to report third-quarter 2020 results on Oct 27.

In the last reported quarter, the British energy giant missed the Zacks Consensus Estimate, which was largely a reflection of drop in oil equivalent production, commodity prices and refining marker margin. Notably, despite beating the consensus estimate in two of the prior four quarters, the company posted an average negative earnings surprise of 18.2%. This is depicted in the graph below:

BP p.l.c. Price and EPS Surprise

BP p.l.c. Price and EPS Surprise

BP p.l.c. price-eps-surprise | BP p.l.c. Quote

Let’s see how things have shaped up prior to this announcement.

Trend in Estimate Revision

The Zacks Consensus Estimate for third-quarter loss per share of 14 cents has witnessed two downward revisions over the past 30 days. The estimated figure suggests a decline of 121.2% from the prior-year reported number.

The consensus estimate for third-quarter revenues of $56.6 billion indicates an 18.4% decline from the year-ago reported figure.

Factors to Consider

Although the price of crude oil in the September quarter recovered sequentially, thanks to easing of social-distancing measures, the commodity’s price was below the year-ago quarter level.

Also, the dip in oil prices is likely to have affected the integrated energy major’s total production volumes. Notably, the consensus estimate for total hydrocarbon production is pinned at 2,436 thousand barrels of oil equivalent per day (MBoE/D), suggesting a drop from the year-ago quarter’s 2,568 MBoE/D.

We also expect the pandemic to have hurt the integrated firm’s refinery throughputs year over year, in the third quarter. It is to be noted that the Zacks Consensus Estimate for the same is pegged at 1,528 thousand barrels per day (MBbl/D), suggesting a decline from 1,813 MBbl/D reported in the September quarter of 2019.

Earnings Whispers

Our proven model does not indicate 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 chances of an earnings beat. That is not the case here as you will see below.

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