BP plc (ADR) (BP): Is it Worth Investing in This Oil Company?

BP and Profitability

As indicated in the chart below, despite the decline in the quarterly average price of oil in the fourth quarter to its lowest level in the past two years, the operating profitability of ExxonMobil and Chevron didn’t diminish: the profitability of ExxonMobil reached 15.4%, and Chevron’s profit margin was 20%. On the other hand, the profitability of BP remained low at 3.6%. One of the reasons for the relatively low profit margin of BP is its provisions related to the oil spill.

Considering the rise in the quarterly average price of oil, the profit margin of these oil companies might rise slightly in the first quarter of 2013. In such a case, these companies’ stocks may rally in the coming weeks.

Final Thoughts

I think BP isn’t getting enough credit for its recovery, and the uncertainty around its future is less significant than the market estimates. Considering the recent steps the company implemented and the high dividend yield it offers, the company should be considered an interesting investment opportunity.

The article Is it Worth Investing in This Oil Company? originally appeared on Fool.com and is written by Lior Cohen.