BP's share price: What to expect in Q4 earnings

BP's share price was volatile in 2019 as macroeconomic conditions hit oil prices worldwide. Over the past 12 months, BP's [BP] share price has dropped more than 12%. And 2020 isn't looking much better, with the share price down 5% since the start of January.

Last quarter, BP saw profit come in at $2.3 billion. While that beat analyst expectations, it was a huge 44% off the $3.8 billion seen in the same quarter last year.

Hurting earnings results were weaker oil prices and maintenance costs. At the time BP’s Chief Financial Officer Brian Gilvary told CNBC that the results had provided “strong operating cash — which has allowed us to stabilize debt this quarter.”

So, will BP's Q4 earnings results beat expectations again? And will that beat boost an ailing share price?

When is BP reporting Q4 earnings?

4 February

What to look out for

Oil bonanza

2019 was a bonanza for oil traders. Supply outages and sanctions hiked the premium on oil with the likes of BP benefitting. According to Bloomberg, BP pocketed billions from its oil trades, along with Royal Dutch Shell and Total. No wonder, considering the company shifts around 11 million barrels a day. These earnings should play a significant part in BP's Q4 result. And with oil markets still volatile, 2020 could prove another profitable year.

CEO Bob Dudley signs off 

BP's Q4 earnings will mark the changing of the guard. CEO Bob Dudley, who has held the position for almost a decade, will be handing over to BP's Upstream chief executive, Bernard Looney. Under Dudley, BP has tried to shift away from carbon-intensive projects following activist pressure.

Shareholders will be picking over any hints on how Looney plans to proceed. Early reports are that he is to merge some assets and shift some carbon-heavy businesses.

Clarity on the dividend

Along with Dudley, BP’s chief financial officer Brian Gilvary will also leave the company. Colin Smith, analyst at Panmure Gordon, reckons Gilvary's departure is earlier than expected. Smith says the departure is down to “problematic guidance over dividend and strategy”. BP deny this, but confusion over the dividend has already hit the share price.

Last year, BP hinted that it would bump up the dividend as it was confident of increased cash flow. However, in the Q3 earnings call Gilvary poured cold water on this. BP's share price promptly dropped This forced BP to quickly release an official statement saying “no decision had been made”. Expect the question of the dividend to come up again during the Q4 earnings call.

What to expect in BP's Q4 earnings?

The City is forecasting BP's profits to come in at $15.06 billion, down from $20.9 billion for the same quarter last year. Revenue is expected to come in at $277.8 billion, down 7%.

Will BP beat analyst expectations? Last quarter, it thrashed City predictions with 0.19p earnings per share against an expected 0.15p.

What's the long-term outlook on BP's share price?

Analysts seem mixed on BP's future. Of the 28 analysts tracking the stock on Yahoo Finance, the majority are split between Buy and Hold. Only 3 give BP an Underperform rating.

Yet for income-seeking investors, the stock carries a 6.7% dividend - one of the best on the FTSE 100.

On the technical side, BP's share price has dropped through the 460p support level last week. At the close on Friday, the share price was trading hands at 456.7p - a level last seen in March 2018. Back then the share price rallied to 586.03p by mid-May 2018. However, that was at a period of growth for the company. Things could be different in 2020.