You’d think that will all of us running to the gas station a few times a week, that energy companies would be raking in the cash. It should make the whole sector a slam dunk, especially with attractive yields. However, that simply hasn’t been the case for many of these stocks. The drag of lower oil prices has been putting some pressure on these stocks. These include today’s Bear of the Day, BP PLC (BP).

BP has long tried to rebrand itself as a cleaner, greener energy company. Admirable, sure—but the market isn’t rewarding ESG lip service when it comes at the expense of operational focus. While peers like Exxon and Chevron are doubling down on efficient fossil fuel production, BP has been pivoting toward renewables with mixed results. The problem? That transition isn't cheap, and it’s dragging on margins.

The most glaring issue here is earnings estimate revisions. Over the last 60 days, eight analysts have slashed their forecasts for the current fiscal year. The Zacks Consensus Estimate for the current year is now down to $2.38 from $3.53. That kind of downward pressure is the kiss of death for a stock in our ranking model, pushing BP into the dreaded Zacks Rank #5 (Strong Sell) territory.

The yield is still nice though at 6.51%. There are other stocks within the Oil and Gas – Integrated – International Peers industry which are in the good graces of our Zacks Industry Rank. There are many names which are Zacks Rank #3 (Hold) stocks as well. These include Exxon Mobil (XOM) and Shell (SHEL).

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This article originally published on Zacks Investment Research (zacks.com).

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