As of June 2, 2025, BP PLC's estimated intrinsic value ranges from $210.01 to $2257.94 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $258.23 | -28.2% |
| Discounted Cash Flow (5Y) | $256.43 | -28.7% |
| Dividend Discount Model (Multi-Stage) | $210.01 | -41.6% |
| Earnings Power Value | $2257.94 | +527.6% |
Is BP PLC (BP.L) undervalued or overvalued?
With the current market price at $359.75, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate BP PLC's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.86 | 1.06 |
| Cost of equity | 9.1% | 12.4% |
| Cost of debt | 5.0% | 5.0% |
| Tax rate | 19.0% | 19.0% |
| Debt/Equity ratio | 0.95 | 0.95 |
| After-tax WACC | 6.6% | 8.3% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $345 | $90,783M | 76.4% |
| 10-Year Growth | $348 | $91,159M | 58.5% |
| 5-Year EBITDA | $219 | $71,325M | 70.0% |
| 10-Year EBITDA | $258 | $77,338M | 51.0% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $37,540M |
| Discount Rate (WACC) | 8.3% - 6.6% |
| Enterprise Value | $450,886M - $564,712M |
| Net Debt | $37,356M |
| Equity Value | $413,530M - $527,356M |
| Outstanding Shares | 155M |
| Fair Value | $2,672 - $3,407 |
| Selected Fair Value | $2257.94 |
| Metric | Value |
|---|---|
| Market Capitalization | $55683M |
| Enterprise Value | $83435M |
| Trailing P/E | 0.00 |
| Forward P/E | 13.80 |
| Trailing EV/EBITDA | 3.20 |
| Current Dividend Yield | 672.54% |
| Dividend Growth Rate (5Y) | -5.75% |
| Debt-to-Equity Ratio | 0.95 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 35% | $77.47 |
| Discounted Cash Flow (5Y) | 29% | $64.11 |
| Dividend Discount Model (Multi-Stage) | 24% | $42.00 |
| Earnings Power Value | 12% | $225.79 |
| Weighted Average | 100% | $481.62 |
Based on our comprehensive valuation analysis, BP PLC's weighted average intrinsic value is $481.62, which is approximately 33.9% above the current market price of $359.75.
Key investment considerations:
Given these factors, we believe BP PLC is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.