Intrinsic value of BP ADR - BP

Previous Close

$34.29

  Intrinsic Value

$6.50

stock screener

  Rating & Target

str. sell

-81%

  Value-price divergence*

-98%

Previous close

$34.29

 
Intrinsic value

$6.50

 
Up/down potential

-81%

 
Rating

str. sell

 
Value-price divergence*

-98%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of BP stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 110.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -17.89
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.54
  18.98
  17.58
  16.33
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.88
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
  7.33
  7.10
  6.89
Revenue, $m
  183,008
  265,545
  374,657
  515,082
  691,410
  907,887
  1,168,257
  1,475,635
  1,832,439
  2,240,371
  2,700,444
  3,213,043
  3,778,018
  4,394,795
  5,062,491
  5,780,028
  6,546,242
  7,359,980
  8,220,181
  9,125,946
  10,076,588
  11,071,674
  12,111,050
  13,194,859
  14,323,552
  15,497,888
  16,718,931
  17,988,048
  19,306,896
  20,677,420
  22,101,838
Variable operating expenses, $m
 
  277,520
  391,094
  537,260
  720,796
  946,124
  1,217,139
  1,537,083
  1,908,474
  2,333,084
  2,811,967
  3,344,402
  3,932,476
  4,574,469
  5,269,463
  6,016,335
  6,813,874
  7,660,880
  8,556,250
  9,499,045
  10,488,553
  11,524,321
  12,606,190
  13,734,309
  14,909,147
  16,131,493
  17,402,457
  18,723,459
  20,096,226
  21,522,782
  23,005,435
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  185,936
  277,520
  391,094
  537,260
  720,796
  946,124
  1,217,139
  1,537,083
  1,908,474
  2,333,084
  2,811,967
  3,344,402
  3,932,476
  4,574,469
  5,269,463
  6,016,335
  6,813,874
  7,660,880
  8,556,250
  9,499,045
  10,488,553
  11,524,321
  12,606,190
  13,734,309
  14,909,147
  16,131,493
  17,402,457
  18,723,459
  20,096,226
  21,522,782
  23,005,435
Operating income, $m
  -2,928
  -11,976
  -16,437
  -22,178
  -29,387
  -38,237
  -48,882
  -61,448
  -76,036
  -92,713
  -111,523
  -131,360
  -154,458
  -179,674
  -206,971
  -236,307
  -267,632
  -300,900
  -336,068
  -373,099
  -411,964
  -452,647
  -495,140
  -539,450
  -585,594
  -633,605
  -683,526
  -735,411
  -789,330
  -845,362
  -903,597
EBITDA, $m
  11,577
  8,697
  12,271
  16,871
  22,646
  29,736
  38,264
  48,332
  60,018
  73,379
  88,448
  105,237
  123,742
  143,943
  165,812
  189,313
  214,409
  241,062
  269,236
  298,902
  330,039
  362,631
  396,674
  432,172
  469,140
  507,603
  547,596
  589,163
  632,359
  677,248
  723,902
Interest expense (income), $m
  1,137
  1,808
  4,357
  7,726
  12,061
  17,504
  24,187
  32,225
  41,715
  52,730
  65,323
  79,526
  95,351
  112,793
  131,834
  152,446
  174,598
  198,252
  223,374
  249,929
  277,892
  307,239
  337,959
  370,046
  403,505
  438,350
  474,603
  512,299
  551,479
  592,193
  634,504
Earnings before tax, $m
  -2,295
  -13,784
  -20,794
  -29,903
  -41,447
  -55,741
  -73,069
  -93,674
  -117,750
  -145,443
  -176,846
  -210,886
  -249,809
  -292,467
  -338,805
  -388,753
  -442,230
  -499,153
  -559,442
  -623,028
  -689,856
  -759,886
  -833,099
  -909,496
  -989,100
  -1,071,955
  -1,158,129
  -1,247,710
  -1,340,809
  -1,437,555
  -1,538,100
Tax expense, $m
  -2,467
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  115
  -13,784
  -20,794
  -29,903
  -41,447
  -55,741
  -73,069
  -93,674
  -117,750
  -145,443
  -176,846
  -210,886
  -249,809
  -292,467
  -338,805
  -388,753
  -442,230
  -499,153
  -559,442
  -623,028
  -689,856
  -759,886
  -833,099
  -909,496
  -989,100
  -1,071,955
  -1,158,129
  -1,247,710
  -1,340,809
  -1,437,555
  -1,538,100

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  23,528
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  263,316
  348,027
  491,031
  675,075
  906,172
  1,189,891
  1,531,136
  1,933,990
  2,401,623
  2,936,266
  3,539,245
  4,211,065
  4,951,530
  5,759,889
  6,634,982
  7,575,397
  8,579,610
  9,646,107
  10,773,501
  11,960,611
  13,206,538
  14,510,713
  15,872,935
  17,293,393
  18,772,677
  20,311,780
  21,912,099
  23,575,423
  25,303,927
  27,100,157
  28,967,022
Adjusted assets (=assets-cash), $m
  239,788
  348,027
  491,031
  675,075
  906,172
  1,189,891
  1,531,136
  1,933,990
  2,401,623
  2,936,266
  3,539,245
  4,211,065
  4,951,530
  5,759,889
  6,634,982
  7,575,397
  8,579,610
  9,646,107
  10,773,501
  11,960,611
  13,206,538
  14,510,713
  15,872,935
  17,293,393
  18,772,677
  20,311,780
  21,912,099
  23,575,423
  25,303,927
  27,100,157
  28,967,022
Revenue / Adjusted assets
  0.763
  0.763
  0.763
  0.763
  0.763
  0.763
  0.763
  0.763
  0.763
  0.763
  0.763
  0.763
  0.763
  0.763
  0.763
  0.763
  0.763
  0.763
  0.763
  0.763
  0.763
  0.763
  0.763
  0.763
  0.763
  0.763
  0.763
  0.763
  0.763
  0.763
  0.763
Average production assets, $m
  148,179
  215,091
  303,472
  417,216
  560,042
  735,389
  946,288
  1,195,264
  1,484,275
  1,814,701
  2,187,360
  2,602,564
  3,060,194
  3,559,784
  4,100,618
  4,681,823
  5,302,456
  5,961,584
  6,658,347
  7,392,016
  8,162,037
  8,968,056
  9,809,950
  10,687,836
  11,602,077
  12,553,289
  13,542,334
  14,570,319
  15,638,586
  16,748,710
  17,902,489
Working capital, $m
  9,459
  -10,887
  -15,361
  -21,118
  -28,348
  -37,223
  -47,899
  -60,501
  -75,130
  -91,855
  -110,718
  -131,735
  -154,899
  -180,187
  -207,562
  -236,981
  -268,396
  -301,759
  -337,027
  -374,164
  -413,140
  -453,939
  -496,553
  -540,989
  -587,266
  -635,413
  -685,476
  -737,510
  -791,583
  -847,774
  -906,175
Total debt, $m
  58,300
  124,492
  220,734
  344,595
  500,124
  691,067
  920,725
  1,191,845
  1,506,563
  1,866,377
  2,272,182
  2,724,317
  3,222,650
  3,766,675
  4,355,613
  4,988,512
  5,664,347
  6,382,100
  7,140,836
  7,939,761
  8,778,270
  9,655,980
  10,572,755
  11,528,724
  12,524,282
  13,560,098
  14,637,112
  15,756,530
  16,919,813
  18,128,676
  19,385,076
Total liabilities, $m
  168,030
  234,222
  330,464
  454,325
  609,854
  800,797
  1,030,455
  1,301,575
  1,616,293
  1,976,107
  2,381,912
  2,834,047
  3,332,380
  3,876,405
  4,465,343
  5,098,242
  5,774,077
  6,491,830
  7,250,566
  8,049,491
  8,888,000
  9,765,710
  10,682,485
  11,638,454
  12,634,012
  13,669,828
  14,746,842
  15,866,260
  17,029,543
  18,238,406
  19,494,806
Total equity, $m
  95,286
  113,805
  160,567
  220,749
  296,318
  389,095
  500,682
  632,415
  785,331
  960,159
  1,157,333
  1,377,018
  1,619,150
  1,883,484
  2,169,639
  2,477,155
  2,805,532
  3,154,277
  3,522,935
  3,911,120
  4,318,538
  4,745,003
  5,190,450
  5,654,940
  6,138,665
  6,641,952
  7,165,256
  7,709,163
  8,274,384
  8,861,751
  9,472,216
Total liabilities and equity, $m
  263,316
  348,027
  491,031
  675,074
  906,172
  1,189,892
  1,531,137
  1,933,990
  2,401,624
  2,936,266
  3,539,245
  4,211,065
  4,951,530
  5,759,889
  6,634,982
  7,575,397
  8,579,609
  9,646,107
  10,773,501
  11,960,611
  13,206,538
  14,510,713
  15,872,935
  17,293,394
  18,772,677
  20,311,780
  21,912,098
  23,575,423
  25,303,927
  27,100,157
  28,967,022
Debt-to-equity ratio
  0.612
  1.090
  1.370
  1.560
  1.690
  1.780
  1.840
  1.880
  1.920
  1.940
  1.960
  1.980
  1.990
  2.000
  2.010
  2.010
  2.020
  2.020
  2.030
  2.030
  2.030
  2.030
  2.040
  2.040
  2.040
  2.040
  2.040
  2.040
  2.040
  2.050
  2.050
Adjusted equity ratio
  0.299
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327
  0.327

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  115
  -13,784
  -20,794
  -29,903
  -41,447
  -55,741
  -73,069
  -93,674
  -117,750
  -145,443
  -176,846
  -210,886
  -249,809
  -292,467
  -338,805
  -388,753
  -442,230
  -499,153
  -559,442
  -623,028
  -689,856
  -759,886
  -833,099
  -909,496
  -989,100
  -1,071,955
  -1,158,129
  -1,247,710
  -1,340,809
  -1,437,555
  -1,538,100
Depreciation, amort., depletion, $m
  14,505
  20,673
  28,708
  39,048
  52,032
  67,973
  87,146
  109,780
  136,054
  166,092
  199,970
  236,597
  278,199
  323,617
  372,783
  425,620
  482,041
  541,962
  605,304
  672,001
  742,003
  815,278
  891,814
  971,621
  1,054,734
  1,141,208
  1,231,121
  1,324,574
  1,421,690
  1,522,610
  1,627,499
Funds from operations, $m
  6,380
  6,889
  7,914
  9,145
  10,585
  12,232
  14,077
  16,106
  18,303
  20,649
  23,125
  25,711
  28,390
  31,150
  33,978
  36,867
  39,811
  42,810
  45,862
  48,973
  52,147
  55,391
  58,714
  62,125
  65,634
  69,253
  72,992
  76,864
  80,881
  85,055
  89,399
Change in working capital, $m
  -4,311
  -3,384
  -4,474
  -5,757
  -7,229
  -8,876
  -10,675
  -12,602
  -14,629
  -16,725
  -18,863
  -21,017
  -23,164
  -25,288
  -27,376
  -29,419
  -31,415
  -33,363
  -35,268
  -37,136
  -38,976
  -40,799
  -42,614
  -44,436
  -46,276
  -48,148
  -50,063
  -52,034
  -54,073
  -56,191
  -58,401
Cash from operations, $m
  10,691
  10,273
  12,388
  14,902
  17,814
  21,107
  24,752
  28,709
  32,932
  37,375
  41,988
  46,727
  51,554
  56,438
  61,354
  66,286
  71,226
  76,173
  81,131
  86,110
  91,124
  96,190
  101,329
  106,561
  111,911
  117,401
  123,055
  128,898
  134,954
  141,246
  147,800
Maintenance CAPEX, $m
  0
  -13,471
  -19,554
  -27,588
  -37,929
  -50,913
  -66,854
  -86,026
  -108,660
  -134,934
  -164,973
  -198,851
  -236,597
  -278,199
  -323,617
  -372,783
  -425,620
  -482,041
  -541,962
  -605,304
  -672,001
  -742,003
  -815,278
  -891,814
  -971,621
  -1,054,734
  -1,141,208
  -1,231,121
  -1,324,574
  -1,421,690
  -1,522,610
New CAPEX, $m
  -16,701
  -66,912
  -88,381
  -113,744
  -142,825
  -175,347
  -210,900
  -248,976
  -289,011
  -330,425
  -372,659
  -415,205
  -457,630
  -499,590
  -540,834
  -581,205
  -620,633
  -659,128
  -696,763
  -733,670
  -770,020
  -806,019
  -841,894
  -877,886
  -914,242
  -951,212
  -989,045
  -1,027,984
  -1,068,267
  -1,110,124
  -1,153,779
Cash from investing activities, $m
  -14,753
  -80,383
  -107,935
  -141,332
  -180,754
  -226,260
  -277,754
  -335,002
  -397,671
  -465,359
  -537,632
  -614,056
  -694,227
  -777,789
  -864,451
  -953,988
  -1,046,253
  -1,141,169
  -1,238,725
  -1,338,974
  -1,442,021
  -1,548,022
  -1,657,172
  -1,769,700
  -1,885,863
  -2,005,946
  -2,130,253
  -2,259,105
  -2,392,841
  -2,531,814
  -2,676,389
Free cash flow, $m
  -4,062
  -70,110
  -95,547
  -126,431
  -162,940
  -205,152
  -253,001
  -306,293
  -364,739
  -427,985
  -495,644
  -567,329
  -642,672
  -721,351
  -803,097
  -887,702
  -975,027
  -1,064,996
  -1,157,595
  -1,252,864
  -1,350,898
  -1,451,833
  -1,555,843
  -1,663,138
  -1,773,952
  -1,888,545
  -2,007,198
  -2,130,208
  -2,257,888
  -2,390,568
  -2,528,589
Issuance/(repayment) of debt, $m
  5,808
  72,826
  96,242
  123,861
  155,529
  190,943
  229,658
  271,121
  314,717
  359,815
  405,805
  452,135
  498,333
  544,025
  588,938
  632,900
  675,835
  717,753
  758,736
  798,925
  838,509
  877,710
  916,776
  955,968
  995,558
  1,035,816
  1,077,014
  1,119,417
  1,163,283
  1,208,863
  1,256,400
Issuance/(repurchase) of shares, $m
  0
  49,197
  67,556
  90,086
  117,016
  148,517
  184,656
  225,407
  270,666
  320,271
  374,020
  430,571
  491,941
  556,800
  624,961
  696,269
  770,608
  847,897
  928,100
  1,011,213
  1,097,274
  1,186,352
  1,278,546
  1,373,986
  1,472,826
  1,575,242
  1,681,433
  1,791,617
  1,906,029
  2,024,923
  2,148,565
Cash from financing (excl. dividends), $m  
  6,588
  122,023
  163,798
  213,947
  272,545
  339,460
  414,314
  496,528
  585,383
  680,086
  779,825
  882,706
  990,274
  1,100,825
  1,213,899
  1,329,169
  1,446,443
  1,565,650
  1,686,836
  1,810,138
  1,935,783
  2,064,062
  2,195,322
  2,329,954
  2,468,384
  2,611,058
  2,758,447
  2,911,034
  3,069,312
  3,233,786
  3,404,965
Total cash flow (excl. dividends), $m
  1,706
  51,913
  68,251
  87,516
  109,605
  134,308
  161,313
  190,234
  220,644
  252,101
  284,180
  315,377
  347,602
  379,474
  410,802
  441,466
  471,415
  500,654
  529,241
  557,274
  584,885
  612,229
  639,478
  666,816
  694,431
  722,513
  751,250
  780,827
  811,425
  843,218
  876,377
Retained Cash Flow (-), $m
  1,930
  -49,197
  -67,556
  -90,086
  -117,016
  -148,517
  -184,656
  -225,407
  -270,666
  -320,271
  -374,020
  -430,571
  -491,941
  -556,800
  -624,961
  -696,269
  -770,608
  -847,897
  -928,100
  -1,011,213
  -1,097,274
  -1,186,352
  -1,278,546
  -1,373,986
  -1,472,826
  -1,575,242
  -1,681,433
  -1,791,617
  -1,906,029
  -2,024,923
  -2,148,565
Prev. year cash balance distribution, $m
 
  16,894
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  19,610
  695
  -2,569
  -7,411
  -14,210
  -23,344
  -35,173
  -50,022
  -68,170
  -89,840
  -115,194
  -144,339
  -177,326
  -214,159
  -254,803
  -299,193
  -347,243
  -398,859
  -453,939
  -512,389
  -574,123
  -639,068
  -707,170
  -778,394
  -852,729
  -930,184
  -1,010,790
  -1,094,605
  -1,181,704
  -1,272,189
Discount rate, %
 
  4.90
  5.15
  5.40
  5.67
  5.96
  6.25
  6.57
  6.89
  7.24
  7.60
  7.98
  8.38
  8.80
  9.24
  9.70
  10.19
  10.70
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
PV of cash for distribution, $m
 
  18,694
  628
  -2,194
  -5,943
  -10,640
  -16,222
  -22,535
  -29,343
  -36,341
  -43,180
  -49,497
  -54,949
  -59,240
  -62,146
  -63,534
  -63,370
  -61,714
  -58,717
  -54,596
  -49,620
  -44,082
  -38,275
  -32,472
  -26,908
  -21,768
  -17,182
  -13,223
  -9,915
  -7,237
  -5,138
Current shareholders' claim on cash, %
  100
  65.0
  43.0
  29.0
  19.9
  13.9
  9.9
  7.1
  5.2
  3.9
  2.9
  2.2
  1.7
  1.3
  1.0
  0.8
  0.6
  0.5
  0.4
  0.3
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0

BP p.l.c. operates as an integrated oil and gas company worldwide. It operates through three segments: Upstream, Downstream, and Rosneft. The Upstream segment engages in the oil and natural gas exploration, field development, and production; midstream transportation, storage, and processing; and marketing and trading of natural gas, including liquefied natural gas (LNG), and power and natural gas liquids (NGLs). It also owns and manages crude oil and natural gas pipelines; processing facilities and export terminals; and LNG processing facilities and transportation, as well as NGLs extraction business. The Downstream segment refines, manufactures, markets, transports, supplies, and trades in crude oil, petroleum, and petrochemical products and related services to wholesale and retail customers. It offers lubricants, and related products and services under the Castrol, BP, and Aral brands to the automotive, industrial, marine, and energy markets; and petrochemical products, such as purified terephthalic acid, paraxylene, acetic acid, olefins and derivatives, and specialty petrochemical products. This segment also sells gasoline, diesel, and aviation fuel. The Rosneft segment engages in the exploration and production of hydrocarbons in the United States, Canada, Vietnam, Venezuela, Brazil, Algeria, the United Arab Emirates, Turkmenistan, and Norway; and offers jet fuel, bunkering, bitumen, and lubricants. This segment also owns and operates 10 refineries in Russia; and refineries in Germany. As of December 31, 2015, it owned and operated approximately 2,500 retail service stations in Russia and internationally. The company also produces bioethanol, sugar, and biobutanol; exports power to the local grid; transports hydrocarbon products through shipping and chartering services; and holds interests in 16 onshore wind farms with a generation capacity of 1,556 megawatts. BP p.l.c. was founded in 1889 and is headquartered in London, the United Kingdom.

FINANCIAL RATIOS  of  BP ADR (BP)

Valuation Ratios
P/E Ratio 5795
Price to Sales 3.6
Price to Book 7
Price to Tangible Book
Price to Cash Flow 62.3
Price to Free Cash Flow -110.9
Growth Rates
Sales Growth Rate -17.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -10.4%
Cap. Spend. - 3 Yr. Gr. Rate -7.4%
Financial Strength
Quick Ratio 4
Current Ratio 0.1
LT Debt to Equity 54.2%
Total Debt to Equity 61.2%
Interest Coverage -1
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. -0.2%
Return On Total Capital 0.1%
Ret/ On T. Cap. - 3 Yr. Avg. -0.6%
Return On Equity 0.1%
Return On Equity - 3 Yr. Avg. -1%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 15.1%
Gross Margin - 3 Yr. Avg. 13.7%
EBITDA Margin 7.3%
EBITDA Margin - 3 Yr. Avg. 5.4%
Operating Margin -1.6%
Oper. Margin - 3 Yr. Avg. -2%
Pre-Tax Margin -1.3%
Pre-Tax Margin - 3 Yr. Avg. -1.4%
Net Profit Margin 0.1%
Net Profit Margin - 3 Yr. Avg. -0.6%
Effective Tax Rate 107.5%
Eff/ Tax Rate - 3 Yr. Avg. 53.3%
Payout Ratio 4009.6%

BP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BP stock intrinsic value calculation we used $183008 million for the last fiscal year's total revenue generated by BP ADR. The default revenue input number comes from 2016 income statement of BP ADR. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our BP stock valuation model: a) initial revenue growth rate of 45.1% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.9%, whose default value for BP is calculated based on our internal credit rating of BP ADR, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of BP ADR.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of BP stock the variable cost ratio is equal to 104.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for BP stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for BP ADR.

Corporate tax rate of 27% is the nominal tax rate for BP ADR. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the BP stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for BP are equal to 81%.

Life of production assets of 11 years is the average useful life of capital assets used in BP ADR operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for BP is equal to -4.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $95286 million for BP ADR - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 3234 million for BP ADR is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of BP ADR at the current share price and the inputted number of shares is $110.9 billion.

RELATED COMPANIES Price Int.Val. Rating
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COMPANY NEWS

▶ What BPs PEG Ratio Tells Us   [10:36AM  Market Realist]
▶ Why Is Short Interest in BP Declining?   [09:05AM  Market Realist]
▶ How BP Stock Measures up SPY so Far in 3Q17   [07:36AM  Market Realist]
▶ The Oil Price Tug Of War   [Aug-15-17 04:00PM  Oilprice.com]
▶ Understanding BPs Cash Flow Trend in 1H17   [07:36AM  Market Realist]
▶ BP finds major gas field just south of Colorado in New Mexico   [Aug-14-17 05:35PM  American City Business Journals]
▶ What Happened with BPs Leverage in 2Q17?   [10:37AM  Market Realist]
▶ Behind BPs 3Q17 Performance Outlook   [09:06AM  Market Realist]
▶ Inside BPs Segmental Earnings Trend in 2Q17   [07:37AM  Market Realist]
▶ BP Prudhoe posts 2Q profit   [Aug-10-17 08:31PM  Associated Press]
▶ Big Oil Is Planning to Produce at $50 Forever   [Aug-09-17 02:55PM  Motley Fool]
▶ Did BP Just Unlock A New Major Shale Gas Basin?   [Aug-08-17 07:00PM  Oilprice.com]
▶ Oil Stuck At $50 As OPEC Output Jumps   [03:00PM  Oilprice.com]
▶ BP finds major gas field in New Mexico's San Juan Basin   [08:50AM  American City Business Journals]
▶ Major oil co. cuts NM jobs, shifts focus to Colorado   [Aug-07-17 07:35PM  American City Business Journals]
▶ PRESS DIGEST- Financial Times - Aug 7   [Aug-06-17 07:04PM  Reuters]
▶ BP Surpasses Profit Expectations, Still Wallowing In Debt   [Aug-05-17 07:00PM  Oilprice.com]
▶ BP Says It Can Profit at Oil Below $50   [Aug-02-17 05:40PM  Investopedia]
▶ Why Did BP Stock Rise 3.2% on August 1?   [10:05AM  Market Realist]
▶ [$$] BP Says It Can Now Profit at Oil Below $50   [12:08AM  The Wall Street Journal]
▶ BP posts 2Q profit   [Aug-01-17 10:58PM  Associated Press]
▶ Bulls Crushed As Oil Crashes Again   [03:00PM  Oilprice.com]
▶ BP Q2 Profit Slumps As Write-downs Weigh   [10:22AM  Oilprice.com]
▶ [$$] BP Says It Can Now Profit at Oil Below $50   [10:07AM  The Wall Street Journal]
▶ BP profit dips but delivers a beat   [07:28AM  Reuters Videos]
▶ $50 Oil for the Rest of the Decade   [06:30AM  24/7 Wall St.]
▶ BP plc (ADR) (BP) Stock: Is MLP Spinoff a Pipe Dream?   [Jul-31-17 05:05PM  InvestorPlace]
▶ Gulf Of Mexico Growth Second Only To Permian   [Jul-29-17 01:00PM  Oilprice.com]
▶ Analyst Ratings for BP before Its 2Q17 Results   [Jul-27-17 10:37AM  Market Realist]
▶ The Pre-Earnings Price Estimate for BP Stock   [09:09AM  Market Realist]
▶ BPs Moving Averages ahead of 2Q17 Earnings   [07:43AM  Market Realist]
▶ The Fall in BP Stock before 2Q17 Earnings Release   [Jul-26-17 05:06PM  Market Realist]
▶ BPs 2Q17 Earnings: Are Prospects Bright?   [03:35PM  Market Realist]
▶ Big Oil Bosses Are Learning to Live With $50 Crude   [Jul-25-17 07:01PM  Bloomberg]
▶ Falling Chinese Demand May Be OPECs Biggest Dilemma   [Jul-24-17 05:00PM  Oilprice.com]
▶ Here Are OPEC's Latest Attempts To Boost Oil Prices   [09:20AM  Investor's Business Daily]
▶ Oil Prices Slip On Falling OPEC Compliance   [Jul-21-17 03:30PM  Oilprice.com]
▶ BP Considering North Sea Asset Sale   [08:37AM  TheStreet.com]
▶ Permian Oil Reserves Are Grossly Exaggerated   [Jul-19-17 07:00PM  Oilprice.com]
Stock chart of BP Financial statements of BP
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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