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Here's Why BP (BP) is a Strong Value Stock

For new and old investors, taking full advantage of the stock market and investing with confidence are common goals.

Many investors also have a go-to methodology that helps guide their buy and sell decisions. One way to find winning stocks based on your preferred way of investing is to use the Zacks Style Scores, which are indicators that rate stocks based on three widely-followed investing types: value, growth, and momentum.

Why Investors Should Pay Attention to This Value Stock

Different than growth or momentum investors, value-focused investors are all about finding good stocks at good prices, and discovering which companies are trading under what their true value is before the broader market catches on. The Value Style Score utilizes ratios like P/E, PEG, Price/Sales, and Price/Cash Flow to help pick out the most attractive and discounted stocks.

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BP (BP)

BP has come a long way since the Gulf of Mexico oil spill incident on Apr 20, 2010, which followed the explosion on the British energy giant’s Deepwater Horizon rig. The largest oil spill incident in America’s history had disrupted the integrated energy player’s financial performance. Notably, BP had taken a pre-tax charge of $32.2 billion related to the disaster, which resulted in the company’s record loss of more than $17 billion in the June quarter of 2010. BP also suspended dividend payments for three quarters, until the firm started paying dividends again in early 2011.

BP sits at a Zacks Rank #3 (Hold), holds a Value Style Score of A, and has a VGM Score of A. Compared to the Oil and Gas - Integrated - International industry's P/E of 5.5X, shares of BP are trading at a forward P/E of 5.1X. BP also has a PEG Ratio of 1.8, a Price/Cash Flow ratio of 3.7X, and a Price/Sales ratio of 0.6X.

A company's earnings performance is important for value investors as well. For fiscal 2022, five analysts revised their earnings estimate higher in the last 60 days for BP, while the Zacks Consensus Estimate has increased $1.21 to $6.00 per share. BP also holds an average earnings surprise of 30.6%.

BP should be on investors' short lists because of its impressive earnings and valuation fundamentals, a good Zacks Rank, and strong Value and VGM Style Scores.


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