Stock Analysis & Valuation BP p.l.c. (BP.SW)

• Previous Close: CHF6.83
• Sector Valuation Confidence Level: Low

Valuation method	Value, CHF	Upside, %
Artificial intelligence (AI)	n/a	n/a
Intrinsic value (DCF)		n/a
Graham-Dodd Method	2.80	-59
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

BP p.l.c. (BP.SW) is a global energy leader headquartered in London, United Kingdom, with a diversified portfolio spanning oil, gas, and low-carbon energy solutions. Founded in 1908, BP operates through four key segments: Gas & Low Carbon Energy, Oil Production & Operations, Customers & Products, and Rosneft. The company is actively transitioning toward a lower-carbon future, investing in renewable energy sources such as wind, solar, biofuels, hydrogen, and carbon capture technologies. BP also maintains a strong presence in traditional energy markets, refining and trading oil products, supplying aviation fuels, and operating electric vehicle charging networks. With a market capitalization exceeding $86 billion, BP remains a major player in the integrated oil and gas sector, balancing legacy hydrocarbon operations with ambitious sustainability initiatives. The company's strategic focus on decarbonization and energy transition positions it as a key contender in the evolving global energy landscape.

Investment Summary

BP presents a compelling investment case with its balanced approach to traditional energy and low-carbon transition strategies. The company reported strong financials for FY 2023, including $210.1 billion in revenue and $15.2 billion in net income, supported by robust operating cash flow of $32 billion. BP's diversified operations mitigate sector volatility, while its investments in renewables and decarbonization align with long-term energy trends. However, risks include exposure to fluctuating oil prices, geopolitical uncertainties (particularly its Rosneft segment), and the capital-intensive nature of energy transition projects. The dividend yield, supported by a $0.26 per share payout, adds income appeal, but investors should monitor debt levels ($63.1 billion) and execution risks in low-carbon initiatives. BP's beta of 0.52 suggests lower volatility than the broader market, making it a relatively stable energy sector play.

Competitive Analysis

BP operates in a highly competitive global energy market, contending with other integrated oil majors and renewable energy players. Its competitive advantage lies in its diversified energy portfolio, strong downstream operations (including Castrol lubricants and retail networks), and early-mover investments in low-carbon technologies. BP's strategic partnerships, such as its stake in Rosneft, provide access to key hydrocarbon resources, while its growing renewable energy assets position it for the energy transition. However, BP faces intense competition from larger peers like Shell and ExxonMobil, which have greater scale in upstream production and refining. BP's renewable energy investments, while ambitious, lag behind some European competitors like TotalEnergies in installed capacity. The company's focus on integrated energy solutions—combining traditional oil and gas with wind, solar, and biofuels—differentiates it from pure-play renewables firms but requires careful capital allocation. BP's strong brand and global retail presence (including EV charging networks) provide a competitive edge in customer-facing segments, but margin pressures in refining and renewables remain a challenge. The company's ability to balance shareholder returns with transition investments will be critical in maintaining its competitive positioning.

Major Competitors

• Shell plc (SHEL.L): Shell is BP's closest peer, with a similar dual focus on hydrocarbons and energy transition. Shell has a larger market cap and more extensive LNG operations, giving it scale advantages. However, BP has been more aggressive in divesting fossil fuel assets and investing in renewables. Shell's stronger financial position allows higher dividends, but BP's Rosneft stake provides unique upstream exposure.
• Exxon Mobil Corporation (XOM): ExxonMobil is the largest Western oil major, with unparalleled upstream scale and technological expertise. Unlike BP, Exxon has been slower to embrace renewables, focusing instead on carbon capture and biofuels. Exxon's financial strength and conservative balance sheet make it less risky than BP, but its lack of renewable energy diversification could be a long-term disadvantage.
• TotalEnergies SE (TTE.PA): TotalEnergies is a leader among European oil majors in renewable energy capacity, particularly in solar and wind. It has outpaced BP in building a low-carbon portfolio but has less downstream integration. Total's strong LNG business complements BP's gas focus, but BP's Rosneft stake and Castrol brand provide unique advantages in certain markets.
• Chevron Corporation (CVX): Chevron rivals BP in gas and downstream operations but has a more conservative transition strategy. Chevron's strong Permian Basin position gives it low-cost upstream advantages, while BP's broader international footprint offers diversification. Chevron's higher margins and lower debt make it financially stronger, but BP's renewable investments provide better long-term transition positioning.
• Equinor ASA (EQNR.OL): Equinor is a leader in offshore wind and carbon capture, with strong government backing. Unlike BP, Equinor is more focused on European energy markets and has less downstream integration. Equinor's renewable projects are further advanced, but BP's global scale and retail networks give it broader market access.