BP
Shares in oil giant BP (LSE: BP)(NYSE: BP.US) have traded as high as 480p this year. However, their fall in the last week takes them close to the level of November 2012 when the shares briefly hit 416p.
Concerns over the final bill for its role in the Gulf of Mexico disaster still hang over BP. Add in the growing conviction that oil extraction will be a more expensive business in the future and you have the recipe for a moribund share price.
Yet the value in BP shares at today’s price is clear. Using the consensus of broker forecasts, BP is trading today on a 2013 P/E of 9.0, with an anticipated dividend yield of 5.1%.
Aggreko
Shares in power equipment firm Aggreko (LSE: AGK) have lost 32% of their value in the last year. Worse still, they show little sign of recovery and today trade within a whisker of their February low.
Last December, analysts rushed to downgrade their profit forecasts following a bearish trading statement from the company. One year ago, 117p of earnings per share was expected. Today, that figure is 93p.
Expectations are for a 6% fall in EPS this year, followed by modest earnings growth of 2% in 2014. The forecast yield of 1.6% offers little protection against further falls. It is hard to see value in Aggreko shares at this price.
British American Tobacco
Since March, expectations for British American Tobacco (LSE: BATS)(NYSE: BTI.US)’s full year profit have been declining. Given that change in sentiment, the share price fall should come as no surprise.
BAT shares today trade at 15.0 times forecast earnings for 2013. To get there, the company will have to deliver 9.2% earnings growth this year. The trouble is, at the interim stage, BAT reported 7.7% growth and a 2% revenue increase. The number of cigarettes sold fell 3.4%.
Can BAT continue to increase earnings while sales are falling? I doubt that the market will continue to pay 15 times earnings now that growth is clearly slowing.