The bp (LON: BP) share price is hovering near its highest level this year after the company published mixed quarterly results. The stock is trading at 403.65p, which is slightly below the YTD high of 420p. It has risen by 16% this year and underperformed other oil and gas stocks like Shell and Exxon.
bp earnings review
bp had a relatively mixed quarter helped by the strong price of crude oil and gas. The company reported its biggest profit in over 10 years even after it decided to give up its shareholding of Russia’s Rosneft. Its profit rose to over $6.2 billion, which was significantly higher than the previous $2.6 billion. Analysts were expecting that the firm would report a profit of over $4.48 billion.
bp also managed to dramatically reduce its net debt. It now has $27.5 billion in net debt while the company announced another $2.5 billion share buyback plan. It has already repurchased stocks worth over $1.6 billion this year. Its operating cash flow rose to over $8.2 billion.
In a statement, the company also announced plans to continue its investments in hydrocarbons. For example, it will start the Herschel Expansion project in the Gulf of Mexico. It also said that it would create a new joint venture with Eni in Angola. BP has also announced major partnerships with Volkswagen Group and Uber.
As part of its decision to exit the Russian business, bp announced that it would have a pre-tax charge of over $20 billion.
So, is the bp share price too cheap to invest in? The company has an attractive dividend yield of about 4.54% and a comfortable payout ratio of just 5.85%. After restarting its payouts last year, the company will likely continue hiking in the coming years. It is also extremely cheap since it has a forward PE ratio of just 5.4x and price to cash flow of 4.05.
bp share price forecast
The daily chart shows that the bp share price has been in a strong bullish trend in the past few months. Along the way, the shares have moved above the ascending trendline that is shown in orange. Further, the stock has moved above the 25-day and 50-day moving averages.
A closer look reveals that the shares have formed a small double-top pattern while the Stochastic Oscillator has moved close to the overbought level. Therefore, further upside will be confirmed if the stock moves above the double-top level of 407p.
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