Is improving performance ahead for Glencore PLC, BP plc, Premier Oil PLC and Petrofac Limited?

Do these resources shares have bright futures? Glencore PLC (LON:GLEN) (GLEN.L), BP plc (LON:BP) (BP.L), Premier Oil PLC (LON:PMO) (PMO.L) and Petrofac Limited (LON:PFC) (PFC.L)




BP plc share price
BP plc share price

As with many industries, the resources sector has experienced a difficult period and the share prices of Glencore PLC (LON:GLEN) (GLEN.L), BP plc (LON:BP) (BP.L), Premier Oil PLC (LON:PMO) (PMO.L) and Petrofac Limited (LON:PFC) (PFC.L) have recently come under pressure. Could improving performance be ahead?

Glencore’s long-term future could be relatively bright in my opinion. The company could benefit from increasing demand for electric vehicles and the raw materials used in their construction. It has also improved its financial strength to my mind, with it becoming a more efficient entity in recent years.

Clearly, risks remain both in terms of wider economic uncertainty and regulatory risks. However, with a single-digit P/E ratio, I feel that the Glencore share price may be undervalued versus a number of its industry peers.

BP’s share price seems to have been negatively impacted by the falling oil price in recent weeks. Further declines could be ahead in the short run in my view, with supply growth set to be higher than expected after sanctions waivers have been announced regarding Iran.

With BP having a dividend yield of almost 6% and it continuing to invest in its future growth prospects, I’m upbeat about its long-term recovery potential versus the FTSE 100.

Premier Oil may also see its share price come under pressure in the near term in my view. Its balance sheet remains highly leveraged in my opinion, and its lack of size and scale may make it relatively unpopular at a time when investors are generally cautious.

In the long run, I feel that the company’s single-digit P/E ratio and its focus on efficiency and debt reduction could boost its investment performance. But Premier Oil may experience further volatility in the short run in my opinion.

Petrofac is forecast to post declining EPS in the current year and next year. Activity levels and investment in the energy sector may come under pressure as a result of a falling oil price. This could further hurt its outlook in my opinion.

With regulatory risks ongoing and Petrofac continuing to have a disappointing financial outlook in my view, I believe that there could be better opportunities available for me elsewhere.




About Robert Stephens 5138 Articles
Robert Stephens is a CFA Charterholder and an Equity Analyst by trade. He is a passionate private investor who has been buying and selling shares for many years, owning a wide range of UK shares in the process. He has written for Citywire and The Motley Fool US and now runs his own business. To contact Robert, please email [email protected] or use one of the other contact methods available on the 'Contact Us' page