BP Prudhoe Bay Royalty Trust (BPT)

HighHopesInSD (89.86) Submitted: 4/10/08 1:09 PM : Start Price: $80.25 BPT Score: 18.38

Sales fell slightly last year, after rising the previous 4 years. EPS fell slightly last year, after rising for the previous 4 years. The Pretax profit margin is very high, at 99%. The ROE is very high and the company has no debt. The high profit and the high ROE are expected as this is a royalty trust. The zero debt is a nice bonus. The current P/E is above the historic averages, which is worrisome, and is in fact higher than it has been in four of the past five years, so this is of more concern. This could limit stock price appreciation, though with record oil prices, this high P/E could be justified. The PEG ratio is higher than desired, due to the falling sales and EPS last year. The payout ratio is around 100%, which is normal for a royalty trust. The stock yields about 9%, so this is a very good yield. I would consider this stock as a Hold at this point. I think that the upside of the stock could be limited by the high yield, though that could be offset if oil prices go higher, and I think that the stock is worth holding for the yield alone, especially in the current trying market environment.

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