BP (LSE:BP.) Issues Fresh Production Guidance, Where Does Fair Value Sit?
BP (LSE:BP.) has issued fresh production guidance for the second quarter of fiscal 2026, giving investors a clearer view of expected output across its upstream, oil production and operations, and gas and low carbon energy segments.
See our latest analysis for BP.
BP’s latest production guidance lands after a period of mixed momentum, with the share price up 18.09% year to date but down 4.42% over three months. The 1-year total shareholder return of 36.36% and 5-year total shareholder return of 133.43% reflect stronger longer term gains.
If this production update has you thinking more broadly about energy and infrastructure, it could be a good time to check out 33 power grid technology and infrastructure stocks
With BP shares up strongly over 12 months, yet still trading below the average analyst price target and a much lower intrinsic value estimate, where does a reasonable view of fair value sit in that gap?
Most Popular Narrative: 18% Undervalued
Against BP’s last close of £5.17, the most followed narrative pegs fair value at about £6.31, using a detailed cash flow and earnings framework built on a 7.63% discount rate.
The ramp-up of major upstream projects, breakthrough exploration successes in Brazil, West Africa, and other regions, and an ongoing focus on high-return organic growth provide BP with the ability to capture persistent global energy demand growth, particularly from emerging markets, supporting visible revenue and earnings expansion.
Curious what sits behind that uplift in earnings power and fair value for BP? The narrative leans on specific revenue, margin and valuation assumptions that are anything but generic.
Result: Fair Value of £6.31 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, some investors will focus on execution risks related to BP’s energy transition spending and the potential for further impairments that could disrupt cash flows and sentiment.
Find out about the key risks to this BP narrative.
Another View: BP valuation looks richer on earnings multiples
While the SWS DCF model points to BP trading at a steep discount to an estimated fair value of £13.30, the earnings multiples present a tighter picture. BP currently trades on a P/E of 33.5x compared with a fair ratio estimate of 23.5x and peer and industry averages of 12.6x and 15.4x respectively, which suggests a higher bar for future delivery and less room for disappointment if forecasts change.
See what the numbers say about this price — find out in our valuation breakdown.
Next Steps
With BP presenting both potential rewards and clear risks, it makes sense to move quickly and test the assumptions yourself rather than rely on any single narrative. You can start with the full breakdown of 3 key rewards and 3 important warning signs
Looking for more BP investment ideas beyond this stock?
If BP has sharpened your focus on where to put fresh capital, do not stop here. Use targeted stock lists to pressure test your next ideas.
- Target resilient income by reviewing companies that show up in the 5 dividend fortresses to see which payouts might better match your risk tolerance.
- Hunt for quality at a discount by scanning the 8 high quality undervalued stocks so you are not relying on BP alone for potential mispricing opportunities.
- Strengthen your core holdings by filtering for financially robust companies in the solid balance sheet and fundamentals stocks screener (20 results) before the crowd starts paying closer attention.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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