It’s been a tumultuous time for the BP (LSE: BP) share price. So what’s new?

Ever for the reason that Deepwater Horizon tragedy in 2010, BP’s lurched from disaster to disaster. Oil price volatility, the pandemic, the power shock and a wobbly inexperienced transition have given the board – and traders – a bumpy journey.

Most lately, BP’s been making a pointy pivot again to fossil fuels, a transfer that some traders will cheer as a return to its core enterprise. Others fear it’s one other misstep in a decade-long identification disaster.

CEO Murray Auchincloss is doubling down on cost-cutting and effectivity, promising to “fundamentally reset” BP’s technique. However does that imply higher returns for shareholders?

Can this FTSE 100 big regain its throne?

BP’s share price is up 17% within the final three months, however nonetheless down 10% over the previous yr. That’s displays weaker oil costs, but in addition an organization that’s misplaced its approach.

BP’s been squeezed between inexperienced activists who assume it’s not doing sufficient on renewables and activist traders who assume it’s doing an excessive amount of. Now it’s made its alternative.

The board’s reducing again on inexperienced tasks, reallocating capital to higher-returning oil and gasoline companies, and ramping up effectivity. It’s additionally focusing on $20bn in asset gross sales and decreasing its web debt from $23bn to between $14bn and $18bn by 2027.

However is the board merely flip-flopping between methods, risking ending up with stranded fossil gas property in a quickly altering power market?

Auchincloss doesn’t actually appear to be on prime of occasions, extra buffeted by wider forces. With activist investor Elliott hovering impatiently, he must get his recreation face on. No second probabilities right here.

So what does the market consider his prospects? The 27 analysts masking BP shares have a median 12-month price goal of simply over 492p, suggesting a possible 11% upside from at the moment’s 444p. 

It’s not precisely a rip-roaring vote of confidence.

No less than traders obtain dividends whereas they look ahead to BP to kind itself out. The yield’s forecast to hit 5.69% this yr and 5.93% in 2026.

Dividends and buybacks too

Share buybacks proceed, however the tempo is slowing as earnings fall. Topic to board approval, BP expects to pay between $750m and $1bn in Q1 2024. That’s down from $1.75bn within the earlier quarter.

I truly purchased BP shares lately. On the time, the price-to-earnings (P/E) ratio was round six. An unmissable cut price, I assumed. Quickly after, BP’s earnings per share plunged 97% in full-year 2024, and out of the blue that P/E ratio soared to over 240 occasions.

I’ve made a modest acquire thus far and bought my newest dividend Friday (28 March), which I’ll robotically reinvest. I’m sticking with BP, and I can perceive why traders would think about shopping for the shares at the moment, regardless of that P/E shock.

Buyers should deal with BP as a pure fossil gas play. It didn’t construct a convincing renewables enterprise when it was noisily committing to doing so, and positively gained’t trouble now. No less than it’s again on house floor.

Buyers contemplating the inventory can take their very own view on that. For now, I’m holding, however I’m not impressed.