Earnings Miss: Here's What BP p.l.c. (LON:BP.) Analysts Are Forecasting For This Year

BP p.l.c. (LON:BP.) just released its latest yearly report and things are not looking great. Results look to have been somewhat negative - revenue fell 8.4% short of analyst estimates at US$208b, and statutory earnings of US$0.86 per share missed forecasts by 9.1%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for BP

Taking into account the latest results, the current consensus from BP's 18 analysts is for revenues of US$216.0b in 2024. This would reflect a modest 3.7% increase on its revenue over the past 12 months. Statutory earnings per share are expected to drop 11% to US$0.81 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$222.4b and earnings per share (EPS) of US$0.86 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.

The analysts made no major changes to their price target of UK£6.13, suggesting the downgrades are not expected to have a long-term impact on BP's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic BP analyst has a price target of UK£9.97 per share, while the most pessimistic values it at UK£5.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. For example, we noticed that BP's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 3.7% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 4.2% a year over the past five years. What's also interesting is that our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue decline 0.8% annually for the foreseeable future. So although BP is expected to return to growth, it's also expected to grow revenues during a time when the wider industry is estimated to see revenue decline.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Unfortunately, they also downgraded their revenue estimates, and our data indicates that is expected to perform better than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on BP. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple BP analysts - going out to 2026, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 2 warning signs for BP (of which 1 shouldn't be ignored!) you should know about.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.