NEW YORK (TheStreet) -- Shares of BP Plc (BP - Get Report) are lower by about 1% to $50.85 in pre-market trade as the oil and gas company faces billions of dollars in additional payments after failing to convince an appeals court that the company is being forced to pay claims that aren't directly related to the 2010 Gulf of Mexico oil spill, Bloomberg reports.
The decision leaves BP two choices: Pay claims the company calls "fictitious," or appeal to the U.S. Supreme Court.
A three-judge panel of the U.S. Court of Appeals in New Orleans earlier rejected BP's view that the claims administrator for the company's $9.2 billion settlement had misinterpreted the agreement and was paying for economic losses that weren't caused by the spill. BP yesterday lost its bid for reconsideration by the full appeals court., Bloomberg notes.
TheStreet Ratings team rates BP PLC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate BP PLC (BP) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, good cash flow from operations, solid stock price performance and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has significantly increased by 107.48% to $8,231.00 million when compared to the same quarter last year. In addition, BP PLC has also vastly surpassed the industry average cash flow growth rate of 18.91%.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- The current debt-to-equity ratio, 0.41, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.93 is somewhat weak and could be cause for future problems.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.3%. Since the same quarter one year prior, revenues slightly dropped by 2.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: BP Ratings Report