BP plc (BP) Seeks a Potential Cut in Oil Spill Fine

Another competitor of BP is Exxon Mobil Corporation (NYSE:XOM), which is a larger company than both BP and Chevron in terms of market capital. Exxon’s market capital stands at $416.77 billion. However, Exxon’s EPS stands at $9.46, which is lower than that of Chevron, which stands at $12.19. The financial performance of Exxon has also not been as impressive as that of its competition. For its third quarter of 2012, Exxon disclosed net income of $9.5 billion, which was significantly lower than its net income in the same quarter in the previous year, which stood at $10.33 billion. The revenue of Exxon has declined as well. For Q3 2012, the revenue is $111.5 billion, while for the same quarter in the previous year it was $120.4 billion. However, when compared in terms of EPS, the EPS of BP is still lower than both of its major competitors. However, the recovering business of BP will help it enhance its EPS.

Stock Ratings

As mentioned earlier, the analysts are highly optimistic regarding the prospective market performance of the company, which is why BP currently holds 8 ‘buy’ recommendations and ‘5’ hold recommendations. The analysts at TheStreet reinforced their ‘buy’ rating for the company stating that BP holds strength in multiple areas. There has been significant growth in the company’s EPS, which shows that BP is on the right track with regard to its financial performance.

After the analysis of different factors influencing BP’s prospective market performance, in my opinion, investors should buy shares of the company. The rationalization behind this recommendation is that the company is on the road to recovery and so far has shown promising results. From the trend of its financial performance in the last two years, it can be deduced that BP will continue to enhance its financial performance in the upcoming fiscal periods. Although the payment of the fine for the oil spill will reduce BP’s profit for the next financial year, its influence will be isolated from the overall business performance of the company.

The article BP Seeks a Potential Cut in Oil Spill Fine originally appeared on Fool.com and is written by Muhammad Bazil.

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