BP A Good Value Proposition (BP)

BP plc (NYSE: BP) has lost $38 billion worth of its market cap since the Deepwater Horizon rig explosion. This translates into a loss of 19% of its market capitalization.

Equity research firm Sanford C. Bernstein has estimated the pretax cost of the Gulf of Mexico catastrophe for BP at $8.2 billion. This is equivalent to 26% of forecast 2010 operating profit for BP. The research firm has said that the overall cost is likely to be spread over many years.

The Wall Street Journal has reported that BP commands a multiple of 6.1X 2011 earnings and yields 6.9%. Its peers are trading at 8X earnings.