Is BP PLC ADR (BP) overvalued?
On Equity Rank's model estimate, BP trades 28% below its fair value. BP PLC ADR (BP) last closed at $44.53; the multi-method model fair value is $61.74.
| Price | Model fair value | Price vs model |
|---|---|---|
| $44.53 | $61.74 | 28% below |
What the answer rests on
- 8 of 11 valuation methods put BP's value above its price and 3 put it below, so the methods disagree.
- To justify today's price, BP's free cash flow would need to grow about -2.5% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew -26.9% a year.
- BP trades at 22.2 times its last year's earnings, against a median of 14.8 for 110 profitable Energy companies.
- Over the past year the price sat below the model fair value on 100% of trading days. The gap ranged from 51% below to 18% below the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind BP's fair value · What prices assume · Other companies