BP Takes $1.5 Billion Charge Following Tax Reform Bill

Energy company says 4th-quarter earnings will be negatively affected

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Jan 02, 2018
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Joining a slew of companies affected by the new tax bill passed by Congress at the end of last year, BP PLC (LSE:BP, Financial) (BP, Financial) announced Tuesday its earnings will be dented by an approximately $1.5 billion accounting charge in the fourth quarter.

The negative impacts of the tax bill are expected to be short-lived, however, as the London-based oil and gas company anticipates future after-tax earnings will be boosted as a result of lowering the U.S. corporate income tax rate to 21%. The company said it is still evaluating the full effects of the tax bill, however.

The actual charge resulting from the new legislation will be disclosed in the company’s fourth-quarter 2017 earnings report, which will be released Feb. 6. Last week, Royal Dutch Shell PLC (RDS.A, Financial)(RDS.B, Financial) said it is expecting a $2 billion to $2.5 billion dent in its fourth-quarter earnings as a result of the tax changes.

BP’s stock was up Tuesday morning, trading around $42.04 on the New York Stock Exchange with a price-earnings (P/E) ratio of 34.88, a price-book (P/B) ratio of 1.39 and a price-sales (P/S) ratio of 0.58. GuruFocus estimates the stock gained approximately 12% in 2017.

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Disclosure: I do not own any stocks mentioned.