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TheStreet Open House

BP Might Be an Undervalued Oil and Gas Stock But is it Worth A Second Look Yet?

Looking at valuation metrics, the forward P/E for BP is on the low side, around nine. But several international oil and gas competitors seem to have more favorable valuations, including Petrobas Argentina (PZE), Statoil ASA (STO) and Total SA ( TOT ).

Click on the interactive chart to compare analyst ratings for these oil and gas stocks over time.

BP’s dividend yield is a rich 4.85%, thanks to the low share price combined with management’s commitment to return cash to shareholders through both share buybacks and dividends. But they aren’t the only energy company that knows how to reward shareholders:

More upside for BP?

As more fraudulent claims are brought to light, the negative perception for BP may see a reversal. BP took massive write-downs and paid for it in selling assets. Now as a leaner, more focused company, BP offers a steady dividend for income investors. 

Growth could come from conservative exploration projects. BP expects to complete between 16 and 18 exploration wells in 2013. So will shareholders benefit from a change in corporate culture to place safety in projects first?

 

 

(Written by Chris Lau, a Kapitall Contributor.  Disclosure: Author is long BP.​)

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