BP

We rate BP PLC (BP) as a Hold with a composite score of 55.6/100 at a current price of $38.35. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in stability (81th percentile) and quality (57th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (26th percentile) and value (52th percentile) tempers our overall conviction. We assign a No Moat rating (38/100), Low uncertainty, and Standard capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

BP PLC holds a top-quartile position (#0 of 50) within the Mining sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 55.6/100 places it at rank #1193 in our full 7,333-stock universe. With a $87.0B market capitalization, BP PLC operates at meaningful scale within the Mining sector, providing competitive advantages in distribution, procurement, and customer reach.

Revenue contraction of -9% combined with momentum at the 26th percentile paints a cautious picture of the near-term business outlook. The market appears to be pricing in continued challenges, and a catalyst for reversal is not clearly visible from current data.

The margin cascade tells an important story: gross margins of 38% (-5.2pp vs sector) narrow to operating margins of 0% (-12.1pp vs sector) and net margins of 0.7%, yielding a gross-to-net conversion rate of 2%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $38.35, BP PLC is trading near fair value based on current fundamentals. Our value factor score of 52/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 234.5x (a 1608% premium to the sector median of 13.7x), EV/EBITDA of 2.5x (discounted to peers), P/B of 0.7x, P/S of 0.1x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis finds only partially justified by current fundamentals.

We assign a Low uncertainty rating to BP PLC. The company exhibits strong financial stability with a beta of 0.69, and a stability factor in the 81th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

Specific risk factors that inform our assessment include: low beta of 0.69 — while defensive, this may indicate limited upside participation in bull markets; elevated valuation multiple (P/E 234.5x) that leaves limited margin for error. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 81th percentile and quality factor at the 57th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: above-average stability (81th percentile) suggests predictable business dynamics; large-cap scale ($87.0B) provides resilience; a 6.29% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate BP PLC's capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 3.6%, and the balance sheet is managed within acceptable parameters (D/E: 50%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; BP PLC falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 6.29% dividend yield provides some income return, but the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, BP PLC receives a Hold rating with a composite score of 55.6/100 (rank #1193 of 7,333). Our quantitative framework assigns a No Moat (38/100, trend: stable), Low uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 54/100.

Our analysis supports a neutral stance on BP PLC. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.