BP PLC Stock Buy Recommendation Reiterated (BP)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- BP (NYSE: BP) has been reiterated by TheStreet Ratings as a buy with a ratings score of B- . The company's strengths can be seen in multiple areas, such as its attractive valuation levels, good cash flow from operations 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.

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Highlights from the ratings report include:
  • Net operating cash flow has increased to $6,340.00 million or 26.54% when compared to the same quarter last year. In addition, BP PLC has also modestly surpassed the industry average cash flow growth rate of 19.00%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.4%. Since the same quarter one year prior, revenues slightly dropped by 0.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Despite currently having a low debt-to-equity ratio of 0.41, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.75 is weak.
  • BP PLC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, BP PLC reported lower earnings of $3.61 versus $8.06 in the prior year. This year, the market expects an improvement in earnings ($4.91 versus $3.61).

BP p.l.c. provides fuel for transportation, energy for heat and light, lubricants to engines, and petrochemicals products. BP has a market cap of $134.81 billion and is part of the basic materials sector and energy industry. The company has a P/E ratio of 5.3, below the S&P 500 P/E ratio of 17.7. Shares are up 1.9% year to date as of the close of trading on Thursday.

You can view the full BP Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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