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BP plc (GB:BP.A)
LSE:BP.A
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BP plc
(LSE:BP.A)
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Rating:61Neutral
Price Target:
159.00p
▲(5.65% Upside)
Action:DowngradedDate:02/18/26
The score is driven primarily by solid cash-flow resilience but pressured/volatile profitability and higher leverage. Earnings-call guidance adds support via disciplined capex, cost cuts, and a deleveraging roadmap, while technical signals are neutral-to-slightly weak and valuation support comes mainly from the ~5.33% dividend yield (P/E not provided).
Positive Factors
Free cash flow strength
BP's step-up to roughly $13bn adjusted FCF in 2025, with operating cash flow near $24.5bn, provides durable internal funding. That cash generation supports dividend funding, disciplined capex, divestments and the targeted deleveraging pathway, improving resilience across commodity cycles.
Structural cost and capex discipline
Material and growing structural cost savings plus tightened capex guidance increase long-term margin sustainability and cash conversion. Persistent opex reductions and disciplined investment lower breakeven needs and reduce cyclicality sensitivity, improving long-run profitability potential.
Project execution and reserves replacement
Consistent project delivery and improved reserves replacement boost future production optionality and reduce growth execution risk. Meeting start-up targets and exploration success underpin medium-term volumes and cash flows, supporting strategic targets beyond short-term price moves.
Negative Factors
Elevated leverage and obligations
Rising leverage and large absolute debt reduce financial flexibility in a cyclical industry, increasing refinancing and covenant risk. Sizeable total financial obligations (~$58bn reported elsewhere) mean deleveraging must continue to avoid constrained capital allocation during downturns.
Volatile, weak profitability
Earnings swung to near zero despite positive EBITDA, indicating weak earnings quality and volatile bottom-line performance. This reduces predictability of returns and complicates long-term planning for dividends, buybacks and strategic investments if cash flows are price-sensitive.
Transition/renewables impairments & uncertainty
Significant impairments in low-carbon assets highlight uncertain returns in parts of the transition portfolio. That forces high-grading, slows near-term growth in renewables, and creates strategic trade-offs between higher-return hydrocarbon projects and lower-return transition investments.
BP plc (BP.A) vs. iShares MSCI United Kingdom ETF (EWC)
Market Cap
£73.97B
Dividend Yield5.37%
Average Volume (3M)4.62K
Price to Earnings (P/E)1650.4
Beta (1Y)>-0.01
Revenue GrowthN/A
EPS GrowthN/A
CountryUK
Employees100,500
SectorEnergy
Sector Strength52
IndustryOil & Gas Integrated
Share Statistics
EPS (TTM)N/A
Shares Outstanding7,232,838
10 Day Avg. Volume4,635
30 Day Avg. Volume4,620
Financial Highlights & Ratios
PEG Ratio-19.42
Price to Book (P/B)1.71
Price to Sales (P/S)0.48
P/FCF Ratio8.05
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
BP plc Business Overview & Revenue Model
Company DescriptionBP p.l.c. provides carbon products and services. The company operates through Gas & Low Carbon Energy, Oil Production & Operations, and Customers & Products segments. It engages in the production of natural gas, and integrated gas and power; trading of gas; operation of onshore and offshore wind power, as well as hydrogen and carbon capture and storage facilities; trading and marketing of renewable and non-renewable power; and production of crude oil. In addition, the company involved in convenience and retail fuel, EV charging, Castrol lubricant, aviation, B2B, and midstream businesses; refining and oil trading; and bioenergy business. Further, it engages in power and storage, digital transformation, carbon management, and bio and low carbon related products, as well as energy and environmental commodities and mobility businesses. The company was founded in 1908 and is headquartered in London, the United Kingdom.
How the Company Makes MoneyBP generates revenue primarily through the exploration and production of oil and natural gas, which involves extracting these resources from various locations worldwide. The company sells crude oil and natural gas to various customers, including refiners and other energy companies. Additionally, BP earns money from the refining process, where crude oil is transformed into various petroleum products, such as gasoline, diesel, and jet fuel, which are then marketed and sold through its extensive network of retail service stations and other distribution channels. Key revenue streams also come from its integrated gas business, which manages the liquefied natural gas (LNG) supply chain and sells natural gas in global markets. BP's strategic partnerships, joint ventures, and collaborations with other energy companies and governments further bolster its revenue generation capabilities, especially in new energy technology sectors. The company's ongoing transition towards renewable energy sources also positions it to capitalize on emerging markets for sustainable energy solutions, contributing to its long-term growth and revenue diversification.
BP plc Earnings Call Summary
Earnings Call Date:Feb 10, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 28, 2026
Earnings Call Sentiment Positive
The earnings call presented a strong set of operational and financial improvements — robust free cash flow growth (+~55% price-adjusted), better ROACE (14% vs 12%), disciplined capex, solid project execution (7 major starts, many ahead of schedule), important emissions and reliability outperformance, and meaningful cost savings ($2.8 billion delivered). Offsetting this were material negatives: four workforce fatalities, ~$4 billion of impairments (mainly in transition assets), the suspension of buybacks (reducing near-term shareholder returns), and a still-elevated balance sheet with substantial financial obligations (~$58 billion) requiring further deleveraging. On balance the positive operational delivery, cash generation and concrete actions to strengthen the balance sheet and cost base substantially outweigh the lowlights, although execution risks and transition-asset challenges remain.Q4-2025 Updates
Positive Updates
Material free cash flow growth
Adjusted free cash flow of around $13 billion in 2025 (price-adjusted), representing ~55% growth versus 2024; operating cash flow for the year was $24.5 billion (operating cash flow plus divestment and other proceeds $30.4 billion).
Improved returns and disciplined capex
Return on average capital employed (price-adjusted) rose to ~14% in 2025 from ~12% in 2024; full year CapEx disciplined at $14.5 billion (organic CapEx $13.6 billion) with tightened 2026 CapEx guidance of $13.0–$13.5 billion.
Strong cost reduction delivery and higher target
Delivered $2.8 billion of structural cost reductions to date (including ~ $2.0 billion in 2025); underlying operating expenditure reduced by >$700 million since 2023. Company increased its structural cost reduction target to $5.5–$6.5 billion by 2027 (up $1.5 billion reflecting the Castrol transaction).
Progress on divestments and balance sheet strengthening
Completed/announced over $11 billion of the $20 billion divestment program in one year; $5.3 billion received in 2025 and another $3–4 billion expected in 2026 (weighted to H2). Net debt reduced to $22.2 billion at year-end, down $800 million versus end-2024; Castrol transaction expected to underpin ~$6 billion of proceeds.
Project execution and upstream performance
Started up 7 major projects in 2025 (5 ahead of schedule); ~150,000 boe/d of the 250,000 boe/d net peak production expected by 2027 is already started (~60% of target). Underlying production held broadly flat despite portfolio changes and annual guidance exceeded.
Reserves and exploration success
Organic reserves replacement ratio improved to 90% in 2025 (from an average of ~50% across prior two years); 12 exploration discoveries in 2025 (including Gulf of America, Namibia and Brazil), and a major Brazilian discovery (Bumerangue) with ~8 billion barrels liquids in place (provisional, wide uncertainty range).
Reliability and emissions outperformance
Upstream plant reliability and refinery availability both above 96% for the year; wells reliability ~98%. Provisional operational emissions in 2025 were 37% below 2019 levels (well ahead of the 20% target); methane intensity fell to 0.04% (vs 2025 target 0.2%).
Competitive advantage in trading & shipping
Supply, trading and shipping delivered an average ~4% uplift to BP's returns, extending this competitive advantage over the past six years.
Operational safety/process safety improvements (metrics)
Combined Tier 1 and Tier 2 process safety events decreased by ~1/3 year-on-year; continued focus on reliability and technology (digital twins, AI) to protect production and manage decline in the 3–5% range.
Negative Updates
Tragic workforce fatalities and safety consequence
Four colleagues were killed in 2025 in the U.S. retail business (roadside incidents), prompting an immediate operational change (permanent stop to roadside assistance next to active traffic lanes) — a major human and reputational loss.
Significant impairments in transition businesses
Recognized around $4 billion of after-tax impairments in the quarter, largely related to transition businesses (biogas and renewables) as part of portfolio high‑grading and slowing growth in lower‑return areas.
Suspension of share buybacks
Board suspended the share buyback program and is fully allocating excess cash to the balance sheet to accelerate deleveraging — negative for near-term returns via buybacks and a change to prior capital return expectations.
Balance sheet and financial obligations remain sizeable
Net debt at $22.2 billion (only $800 million reduction in 2025) and total financial obligations (debt, hybrids, leases, Gulf of America settlement liabilities) around $58 billion — substantial deleveraging still required to reach the $14–$18 billion net debt target by end-2027.
Working capital and cash uses
Adjusted working capital build of $2.9 billion in 2025 (a cash drag); uses of cash included $1.2 billion Gulf of America settlement payment and $1.2 billion hybrid redemption, leaving limited free cash deployment flexibility in the near term.
Portfolio and regional cost/competitiveness gaps
Not all operated regions and customer businesses are top-quartile on cost; customers historically middle to lower quartile and some refineries still need to achieve targeted cash breakeven reduction (aim was $3/boe by 2027 — ~80% of that target achieved in 2025).
Uncertainty around transition/renewables returns
Impairments and portfolio re‑rating in transition businesses signal weaker-than-expected returns in parts of the low‑carbon portfolio; high‑grading reduces near-term growth in those areas and creates execution decisions on timing/scale of future investment.
Resource-development uncertainty for large discoveries
Bumerangue (c. 8 billion barrels in place) is materially promising but carries wide uncertainty on recoverable volumes and development timing/costs; appraisal and potential partner decisions are required before value is de‑risked.
Company Guidance
The guidance emphasized strengthening the balance sheet and disciplined capital allocation while accelerating cost and operational performance: BP reported adjusted replacement‑cost profit of $7.5bn and generated about $13bn of adjusted free cash flow in 2025 (price‑adjusted ≈ +55% y/y on a $70/bbl basis), operating cash flow $24.5bn (and $30.4bn including divestment/other proceeds), end‑2025 net debt $22.2bn (down $0.8bn y/y) with a net‑debt target of $14–18bn by end‑2027, and total financial obligations of ~ $58bn; 2025 CapEx was $14.5bn (organic $13.6bn) with 2026 CapEx guided to $13–13.5bn. Management suspended buybacks, kept the dividend ($0.0832 per ordinary share) with at least 4% p.a. growth as the first financial priority, and reiterated a $20bn divestment program (>$11bn completed/announced; $5.3bn received in 2025; ~$6bn expected from Castrol; $3–4bn expected in 2026). Cost reduction delivery reached $2.8bn to date (≈$2bn in 2025) with an increased structural target of $5.5–6.5bn by 2027 and expected underlying opex of ~$19–20bn by 2027; ROACE was ~14% in 2025 (price‑adjusted) with a >16% target for 2027. Operationally BP cited upstream production broadly flat underlying, 7 major project start‑ups (150k of 250k boe/d net peak production now started), 2026 production ~2.3m boe/d (ex‑divestments), reserves replacement ratio 90% in 2025 (100% target by 2027), plant/refinery availability >96%, wells reliability ~98%, operational emissions down ~37% vs 2019, methane intensity ~0.04%, managed base decline within 3–5%, and noted ~$4bn after‑tax impairments in Q4 as part of high‑grading the portfolio.BP plc Financial Statement Overview
Summary
Cash generation is a clear strength (consistently large operating cash flow and solid positive free cash flow, including ~$11.3B in 2025), but earnings quality and profitability are weak and volatile (net margin fell to near breakeven in 2025). Balance-sheet risk has risen with higher leverage (debt-to-equity ~1.37 in 2025) and elevated total debt, reducing flexibility in a cyclical business.Income Statement
Revenue has been volatile: strong rebound after 2020, then two straight annual declines (2023–2024) before a slight uptick in 2025. Profitability is the main concern—net margin collapsed from strong profitability in 2023 to near breakeven in 2025 (net income ~$0.06B on ~$189B revenue), indicating significant earnings pressure despite still-positive EBITDA margins. Strengths include generally solid gross/EBITDA margins for the sector in most years, but the sharp swing in bottom-line results and inconsistency vs. prior years weigh on the score.52
Neutral
Balance Sheet
Leverage has increased, with debt-to-equity rising from below 1.0 in 2022–2023 to ~1.37 in 2025 as equity declined. Total debt is elevated (~$72.5B in 2025), which reduces flexibility in a cyclical commodity business. Offsetting this, the company maintains a very large asset base (~$279B) and historically has generated strong returns in better years (e.g., 2023), but the recent deterioration in equity and higher leverage are notable balance-sheet risks.55
Neutral
Cash Flow
Cash generation remains a relative bright spot: operating cash flow is consistently large (roughly $24–41B annually) and free cash flow is solid and positive in recent years (about $11.3B in 2025). Free cash flow growth rebounded sharply in 2025 versus 2024, supporting shareholder returns and reinvestment capacity. The key weakness is that cash flow strength has not translated into consistent earnings quality recently—free cash flow relative to net income is not strong in 2024–2025—highlighting a gap between cash generation and reported profitability.68
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 189.34B | 185.23B | 213.67B | 240.86B | 154.71B |
| Gross Profit | 33.53B | 28.11B | 47.39B | 54.05B | 21.65B |
| EBITDA | 31.07B | 25.11B | 42.89B | 29.37B | 27.82B |
| Net Income | 55.00M | 382.83M | 15.50B | -2.48B | 7.42B |
Balance Sheet | |||||
| Total Assets | 278.53B | 282.23B | 280.29B | 288.12B | 287.27B |
| Cash, Cash Equivalents and Short-Term Investments | 36.71B | 34.52B | 28.59B | 29.77B | 30.96B |
| Total Debt | 72.53B | 71.55B | 63.08B | 55.49B | 69.79B |
| Total Liabilities | 204.53B | 203.91B | 194.80B | 205.13B | 196.83B |
| Stockholders Equity | 53.05B | 59.25B | 70.28B | 67.55B | 75.46B |
Cash Flow | |||||
| Free Cash Flow | 11.27B | 12.00B | 17.75B | 28.86B | 12.72B |
| Operating Cash Flow | 24.49B | 27.30B | 32.04B | 40.93B | 23.61B |
| Investing Cash Flow | -11.50B | -13.25B | -14.87B | -13.71B | -5.69B |
| Financing Cash Flow | -15.88B | -7.30B | -13.36B | -28.02B | -18.08B |
BP plc Technical Analysis
Neutral
150.50
Price Trends
150.09
Negative
148.49
Positive
146.56
Positive
Market Momentum
0.23
Positive
48.57
Neutral
49.81
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:BP.A, the sentiment is Neutral. The current price of 150.5 is above the 20-day moving average (MA) of 150.20, above the 50-day MA of 150.09, and above the 200-day MA of 146.56, indicating a neutral trend. The MACD of 0.23 indicates Positive momentum. The RSI at 48.57 is Neutral, neither overbought nor oversold. The STOCH value of 49.81 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for GB:BP.A.
BP plc Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | £175.51B | 11.92 | 8.25% | 4.00% | -9.21% | -2.61% | |
73 Outperform | £1.66B | 5.30 | 17.24% | 10.99% | -2.66% | 0.11% | |
70 Outperform | £2.58B | 13.86 | 12.03% | 5.64% | 159.13% | 143.76% | |
65 Neutral | $15.17B | 7.61 | 4.09% | 5.20% | 3.87% | -62.32% | |
63 Neutral | £4.75B | -5.60 | -11.32% | 8.77% | 123.03% | -330.89% | |
61 Neutral | £73.97B | 1,650.36 | ― | 5.37% | ― | ― | |
54 Neutral | £4.08B | 11.13 | -4.67% | 14.05% | 63.10% | -161.03% |
* Energy Sector Average
GB:BP.A
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.