A. Introduction
This document is about understanding and implementing the fundamental analysis in practical while studying its implications for the purpose of stock valuation of different companies.
In this study, fundamental analysis is performed for the stock valuation of a renowned oil and gas sector company named British Petroleum PLC (hereinafter referred to as “BP”).
To perform fundamental analysis of the stock of BP, various qualitative and quantitative factors are discussed and analyzed in detail. These include studying business model and governance structure of BP as well as financial analysis of its financial statements. Overall, economy and industry analysis is also performed to aid the study.
Finally, based on the analysis
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It has a vide customer base. It holds a sizeable market share as compared to its competitors. Competition is restricted in Oil and Gas industry by OPEC. The industry also faced strict health and safety requirements and has to observe stringent exploration and production rights regulations.
The core business model of BP involves the exploration of oil and gas resources. It has a very strong and efficient business model that is highly attractive for potential shareholders.
BP is involved in research in collaboration with many universities hence gaining advantage of latest research and highly talented employees. It deploys it seismic imaging technology to enhance the data analysis and productivity of its projects. BP has introduced world’s first automated robot to enhance its oil recovery hence providing more light oil to its customers. All these and few other steps provided a great competitive advantage to BP.
BP showed a decline in Sales in 2014, which is mainly due to price collapse in the Oil and Gas industry. It has reduced its short-term investments to improve cash flow. Due to the liabilities and obligations of BP regarding Gulf of Mexico, oil spill its interest cost has significantly increased. EPS of BP is also significantly decreased in 2014.It has also paid a good amount of dividend in 2014 which is a positive signal
Currently headquartered in London, BP is one of the largest producers of both oil and natural gas. BP provides its customers with fuel for transportation and energy for heat and light. BP’s core business is gas exploration and production division and their main sources of production include Angola, Argentina, Australia, Azerbaijan, Egypt, Trinidad, the United Arab Emirates, the United Kingdom and the United States (BP PLC (BP) Company Profile | Reuters.com. (n.d.). Retrieved October 27, 2015.). In 2013, BP produced 628,000 barrels of oil each day in the US and was the sixth largest producer of natural gas. Each day, BP sells 50 million gallons of fuel in the US consisting of 7,500 BP branded locations located in 13 states. BP is always seeking new opportunities for advancement in technology so that their operation is safer and more efficient. The company is leading the way in in the energy industry with the world’s largest supercomputer used for commercial research, located in Houston and also the first to use drones in the United States. To further place themselves ahead in the industry, BP has invested over $160 million in 2 dozen companies for advancements in technology. BP currently has 17,000 employees and on average, donates approximately $30 million each year to community
BP is the third largest multi-national company 's energy companies. It specializes in oil; natural gas and alternative fuels, such as electricity and renewable energy. BP also and Chemicals, Marketing and refining them in the industry very competitive player. BP has changed: from the development of the local oil company into a global energy group, employing over 96,000 people and operates in more than 100 countries worldwide. BP believes that sustainable growth and corporate social responsibility has been included but it is whether CSR has actually been realized yet been established, or if it ISA
The purpose of this report is to evaluate the stock price of Wal-Mart Stores Inc. (which ticker symbol in NYSE is WMT) by fundamental analysis. According to this analysis, I recommend that Wal-Mart is worth to invest in the long term because of the potential growth of market shares and revenue. Besides, based on P/E method and Gordon model, WMT price is undervalued; therefore, if investors buy the stock, they will get benefit not only in capital gain but also in dividend cash inflow.
In utilizing the fundamental data provided by the 2010 Richard Ivey School of Business Foundation article titled Valuing Wal-Mart - 2010, I have made the following conclusions regarding the value of Wal-Mart (WMT) stock as of February 2012.
Most rely on valuation heuristics involving P/E, PEG, and price-to-sales . The simplicity of using heuristic triggers dependence on valuation heuristics as an alternative for the fundamental valuation. P/E, PEG, and price-to-sales need few variables and use simple formulas. Therefore , the estimates are rather perceptive THUS subject to bias. The cause of these biases arise from weak assumption made towards P/E, PEG, and price-to-sales inputs.
The state of California remains lost as to what action to take with the drought. What is the proper solution to the current predicament residents of California are in? The answer to that question is an improved form of desalination and mandating the amount of water that farmer’s are available to and what crops they should be limited to. California coastline runs along eight hundred and forty miles of the Pacific Ocean. With this easy access to this water, desalination is the most plausible solution to the lack of water. It is a process in which salt is extracted from ocean water through a process called reverse osmosis. This process is incredibly expensive and power hungry but creating a
This event resulted in the de-listing from the Dow Jones Sustainability Index and the FTSE4Good Index as well as cost millions for breaking these laws. As a result of being de-listed BP is focused on socially responsible investors. Shareholders and analyst are engaged through an annual meeting as well as webcast and one-to-one meetings. Carl Sandlin was appointed in 2012 to oversee and report the company’s progress in implementing the Bly report recommendations. The Bly report consists of 26 recommendations resulting from the Gulf of Mexico spill. In order for BP to be relisted, they must closely monitor not only how they operate but with whom they operate (BP, 2014).
BP may be ranked 3rd largest energy company and is positioned as a multinational oil company. And their headquartered station in London, operates petrochemical network of its subsidiaries and retail brands ( ARCO; Amoco; Castrol) But this company has come through much tribulations since there accident in 2007 and they are still strong.
Some internal weaknesses are also existed which could influence the company. For the oil and gas company, the main problems refer to pollution and safety. BP has involved in the largest environment problem which is caused by the spill
The BP operations are spread across the world. It carries out its oil prospecting and extraction operations in 29 countries and retails its products in more than 70 countries. It currently employs a total of 79,700 employees over the globe and its international headquarter is located in London (BP p.l.c. 2012b). Detailed company particulars and operating information are attached at the Appendix A. For this report, we will be focusing on the current issues that BP faces, analysis of its financial performance and lastly, valuating its shares with the use of various valuation models.
Secondary information is collected for this case. This case study limited only one techniques of financial analysis that is Ratio Analysis and also taken a single company. Thus the conclusion of the analysis carried out in a professional manner will be able to correctly describe the evaluation of the company and to substantiate the user’s decisions.
The oil spill undermines the reputation and market position of British Petroleum, thus its stock prices decline dramatically. Even though BP took measures for resolving these problems, its way was not beneficial enough and therefore, it still requires more advantageous resolutions.
The image as well as the operational business reputation of a corporation is critical to the survivability of the corporation in today’s business world. This reputation is even more critical when a business has is known globally with holdings and operations around the world. Such is the case with British Petroleum (BP) as it actively explores for oil in 26 countries around the world. BP is renowned as an industry leader in oil production and the refinement of oil related products such as gasoline, kerosene and motor oil products. In 1999, BP acquired American Oil Company, also
British petroleum (BP) is one of the seven super major oil company in the world. BP are the fourth largest gas and oil company in the world. BP has a hand in every aspect of the oil business from exploring for new oil to marketing and distribution. BP originally started as the Anglo-Persian Oil Company in 1908, established as a subsidiary of Burmah Oil Company. The Burmah Oil Company. Would capitalize on discoveries they made in Iran and the middle east. The company would take its current name as British a petroleum in 1954. The company slowly started to expand from their roots in the middle east. BP chose to expand to Alaska in 1965. BP would continue their expansion in America when the gain the majority control of Standard Oil of Ohio in 1978. Also during the time BP would continue their ongoing exploration for new sources of oil. They became the first company to strike oil in the North Sea. The British government gradually privatized Standard Oil of Ohio for 1978-1987. In the last half of the 20th and the beginning of the 21st century BP took two major steps to expand their company. BP first major expansion occurred when they partnered with Amoco during this time they also acquired and absorbed Burmah Castrol in 2000. Also for 2003 to 2013 BP had a joint partnership with the oil company TNK of Russia. BP tireless effort towards expansion have made them highly successful and one of the top four oil and gas companies in the world. BP turned a profit of 6.48 billon U.S.
Shell must be sharp and focus to sustain competitive advantage over Total, Exxon, Chevron, and BP. Shell lowered costs at its Canadian operations to ensure that they remain competitive in other regions. Shell is believed to be around longer than any other oil, gas, and energy company because of the new patents and creations they are about to be a part of in the alternative energy industry. Shell has countless projects in the future and will still be the largest and