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BP plc (BP) is set to report fourth-quarter 2021 results on Feb 8.

In the last reported quarter, BP comfortably beat the Zacks Consensus Estimate, which was largely driven by higher realizations of commodity prices and a stronger refining business. It beat the consensus estimate thrice in the prior four quarters, while missing the same on one occasion, with an average earnings surprise of 10.82%. This is depicted in the graph below:

BP p.l.c. Price and EPS Surprise

(Click on image to enlarge)

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 its fourth-quarter earnings per share of $1.18 has witnessed one downward revision and three upward revisions in the past 60 days. The estimated figure suggests a massive improvement from the prior-year reported number.

The consensus estimate for fourth-quarter revenues of $42.1 billion indicates a 13.3% decline from the year-ago reported figure.

Factors to Consider

The pricing scenario of oil in fourth-quarter 2021 improved drastically from the prior-year period, thanks to the rolling out of coronavirus vaccines. The pricing environment of natural gas also improved dramatically in the December quarter from the year-ago period. The rise in oil and natural gas prices is likely to have aided BP’s upstream businesses.

The Zacks Consensus Estimate for BP’s replacement cost (RC) profit before interest and tax from oil production & operations is pegged at $3,000 million, reflecting a massive improvement year over year.

However, owing to seasonal demand, BP expects its refining margins to be lower in the December quarter of 2021.

Earnings Whispers

Our proven model does not conclusively predict 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 not the case here as you will see below.

Earnings ESP: BP’s Earnings ESP is -5.96% as the Most Accurate Estimate is $1.11 per share while the Zacks Consensus Estimate is $1.18 per share.

Zacks Rank: BP currently sports a Zacks Rank #1.