I’ve been keeping an eye on BP Prudhoe Bay Royalty Trust (NYSE:BPT) because I’m attracted to its fundamentals. Looking at the company as a whole, as a potential stock investment, I believe BPT has a lot to offer. Basically, it is a financially-healthy company with a a strong track record of performance, trading at a discount. Below, I’ve touched on some key aspects you should know on a high level. For those interested in understanding where the figures come from and want to see the analysis, take a look at the report on BP Prudhoe Bay Royalty Trust here.
Flawless balance sheet and good value
Over the past year, BPT has grown its earnings by 57.81%, with its most recent figure exceeding its annual average over the past five years. The strong earnings growth is reflected in extraordinary returns, with net income levels more than double that of the company’s equity levels, which is an notable feat for the company. BPT’s strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This implies that BPT manages its cash and cost levels well, which is an important determinant of the company’s health. BPT currently has no debt on its balance sheet. This means it is running its business only on equity capital funding, which is typically normal for a small-cap company. Investors’ risk associated with debt is virtually non-existent and the company has plenty of headroom to grow debt in the future, should the need arise.
BPT’s share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. Investors have the opportunity to buy into the stock to reap capital gains, if BPT’s projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the company. Also, relative to the rest of its peers with similar levels of earnings, BPT’s share price is trading below the group’s average. This supports the theory that BPT is potentially underpriced.
For BP Prudhoe Bay Royalty Trust, I’ve put together three key aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for BPT’s future growth? Take a look at our free research report of analyst consensus for BPT’s outlook.
- Dividend Income vs Capital Gains: Does BPT return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from BPT as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of BPT? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.