Current Price
$42.78
Intrinsic Value
$54.06
+20.9% margin of safety
What Is BP p.l.c.'s Intrinsic Value?
As of 2026-06-12, our base-case DCF model estimates the intrinsic value of BP p.l.c. (BP) at $54.06 per share, compared with a market price of $42.78, a margin of safety of +20.9%. The base case assumes 5.7% annual free cash flow growth and a 10.0% discount rate.
Across the sensitivity grid the estimate spans $39.67 to $70.87. Intrinsic value is an estimate built on assumptions, not a fact. A higher discount rate or slower growth pushes the estimate down, while stronger cash flow growth lifts it.
How our DCF works · Recalculate with your own assumptions · What is intrinsic value?
Is BP p.l.c. (BP) Undervalued?
At $42.78, BP trades about 20.9% below our base-case intrinsic value estimate. That is a real discount, but it stays short of the 30% margin of safety we require before calling a stock undervalued.
COMPETITIVE MOAT
↑Global Integrated Infrastructure
BP possesses extensive global infrastructure for exploration, production, refining, and distribution. This integrated network creates significant barriers to entry for new competitors.
↑Brand Recognition and Scale
As a major integrated oil and gas company, BP benefits from strong brand recognition and economies of scale. This allows for efficient operations and market influence.
↑Technological Expertise
The company leverages advanced technology and deep expertise in complex extraction and processing. This is crucial for accessing and developing challenging hydrocarbon reserves.
INVESTMENT RISKS
↓Commodity Price Volatility
BP's profitability is highly sensitive to fluctuating global oil and gas prices. Geopolitical events and economic downturns can significantly impact revenue.
↓Energy Transition Pressures
The global shift towards renewable energy sources poses a long-term threat to fossil fuel demand. BP faces pressure to adapt its business model and invest in cleaner alternatives.
↓Regulatory and Environmental Scrutiny
The industry faces increasing regulatory oversight and environmental concerns. Potential litigation, as indicated by recent investigations, adds to this risk.
Base case
BP base case valuation
Intrinsic Value
$54.06
Margin of safety
+20.9%
Expected annual return
+4.8%
Base case assumptions: 5.7% annual growth, 10.0% discount rate, 9x exit multiple, 5 year projection. Data as of 2026-06-12.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the BP valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for BP p.l.c. respond.
Open DCF Calculator for BPCompany Overview
BP p.l.c. operates as a global energy company, offering a wide array of carbon-based and sustainable products and services. Its operations are structured across three primary segments: Gas & Low Carbon Energy, Oil Production & Operations, and Customers & Products. The Gas & Low Carbon Energy division is responsible for the extraction and integrated generation of natural gas and power. It actively trades gas and both renewable and non-renewable electricity. This segment also manages onshore and offshore wind farms and develops innovative solutions like hydrogen production and carbon capture and storage facilities. Meanwhile, the Oil Production & Operations segment focuses on crude oil extraction. The Customers & Products arm encompasses a diverse portfolio, including convenience stores and retail fuel sales, electric vehicle charging infrastructure, and the Castrol lubricants brand. It extends its reach to aviation and business-to-business (B2B) services, alongside midstream operations (like transportation and storage), refining activities, oil trading, and the expanding bioenergy sector. Established in 1908, BP maintains its headquarters in London, United Kingdom.
Financial Metrics — BP Stock Valuation Data
Revenue/Share (TTM)
$12.51
FCF/Share (TTM)
$0.74
ROIC (TTM)
4.6%
ROE (TTM)
5.5%
P/FCF
9.3x
EV/EBITDA
4.2x
FCF Yield
10.71%
Debt/Equity
1.33x
Based on trailing twelve-month data, BP shows a free cash flow per share of $0.74 and a ROIC of 4.6%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 9.3x and FCF yield of 10.71% are important context metrics when evaluating BP's stock valuation relative to peers.
Frequently Asked Questions
What is the intrinsic value of BP?
BP p.l.c. currently generates $0.74 in free cash flow per share. At the current price of $42.78, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is BP undervalued?
BP trades at a P/FCF ratio of 9.3x with a free cash flow yield of 10.71%. This relatively low P/FCF may suggest the stock is attractively priced relative to its cash generation. However, whether BP is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value BP stock using DCF?
To perform a DCF valuation on BP p.l.c.: (1) Start with the trailing free cash flow per share ($0.74) as the base, (2) project future FCF growth over 5-10 years based on Oil & Gas Integrated industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting BP's risk profile — with a debt-to-equity of 1.33x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to BP?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For BP p.l.c., this means projecting how much free cash flow the company will produce over the next 5-10 years, shaped by Oil & Gas Integrated trends, then discounting those amounts to today's dollars. BP's ROIC of 4.6% suggests the company may face challenges generating returns above its cost of capital.
How does WACC affect BP stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For BP, with a debt-to-equity ratio of 1.33x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 4.2x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See BP PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Energy valuationsDCF and P/E value BP with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-06-12. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.