Wednesday, 7 August 2013

A Look at BP


I bought shares of BP 3 weeks ago and I’m considering adding more since I cannot find much value in the current market. I wanted to buy CAT below $83, but based on the latest results, I think the share price might fall some more. 

Average Dividend Yield Analysis*

BP PLC
Year
High Price
Low Price
1Q
div.
2Q
div.
3Q
div.
4Q
div.
Annual Dividend
High Yield
Low Yield
2003
$49.59
$34.67
$0.375
$0.375
$0.390
$0.390
$1.53
4.41%
3.09%
2004
$62.10
$46.65
$0.4050
$0.4050
$0.4260
$0.4260
$1.66
3.56%
2.68%
2005
$72.66
$56.60
$0.51
$0.51
$0.5355
$0.5355
$2.09
3.69%
2.88%
2006
$76.85
$63.52
$0.5625
$0.5625
$0.5895
$0.5895
$2.30
3.63%
3.00%
2007
$79.77
$58.62
$0.6195
$0.6195
$0.6495
$0.6495
$2.54
4.33%
3.18%
2008
$77.69
$37.57
$0.8115
$0.8115
$0.84
$0.84
$3.30
8.79%
4.25%
2009
$60.00
$33.70
$0.84
$0.84
$0.84
$0.84
$3.36
9.97%
5.60%
2010
$62.38
$26.75
$0.84
$0.00
$0.00
$0.00
$0.84
3.14%
1.35%
2011
$49.50
$33.62
$0.42
$0.42
$0.42
$0.42
$1.68
5.00%
3.39%
2012
$48.34
$36.25
$0.48
$0.48
$0.48
$0.54
$1.98
5.46%
4.10%
2013


$0.54
$0.54
$0.54
$0.54
$2.16


Stock prices are per calendar year.
10y ave
5.20%
3.35%
Stock prices in red indicate where I found errors in the S&P report.
5y ave
6.47%
3.74%
Dividends are recorded in the quarter they were paid.
3y ave
4.53%
2.95%







5y
$33.37
$57.79







3y
$47.65
$73.33






Super Cheap
$21.66



The current stock price ($41.23) is sitting nicely between the 3 and 5 year average dividend yields.

Graham Price

BP’s 2010, 2011 and 2012 EPS were -$1.19, $8.06 and $3.63. 3Y Ave EPS = $3.50.
BP’s BV is $40.87.
Graham Price = SQRT (3Y Ave EPS * BV * 22.5) = $56.73

Cyclically Adjusted Price to Earnings Ratio

BP’s 10Y Ave EPS = $4.65
CAPE = Stock Price / 10Y Ave EPS = $41.23 / $4.65 = 8.9
A CAPE below 20 is good.

Conclusion

All three metrics above indicate that BP’s current share price of $41.23 is attractive. I guess you just have to be willing to stomach the legal uncertainty.

2013 and 2014 EPS are estimated at $8.92 and $5.40, respectively.



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