It has not been a good start to the year for BP Plc (ADR) (NYSE:BP). Keep in mind that the shares are off by 11%. Yet the various other mega-cap oil stocks have also posted losses, such as Exxon Mobil Corporation (NYSE:XOM), Royal Dutch Shell Plc (ADR) (NYSE:RDS.A, NYSE:RDS.B) and Chevron Corporation (NYSE:CVX). All this is in stark contrast to much of the rest of the stock market, which seems to reach new highs every day.

But then again, with the oil stocks, the earnings have not been encouraging. For example, during the latest quarter for BP, the net earnings came to only about $400 million. What’s more, for the full-year, it was $2.59 billion, down from $5.9 billion in 2015. This was actually the worst annual performance in a decade.

It’s important to note that — during 2016 — Brent oil prices averaged about $44 a barrel, which was the lowest level in 12 years. Natural gas prices also remained weak.

But such is the cyclical nature of the energy business. Yet perhaps there may be an opportunity here with BP stock — especially for value investors? Maybe so. But to gauge this, let’s take a look at three pros and cons.

3 Pros on BP Stock

Leadership: When Bob Dudley took the helm of BP in late 2010, the situation looked bleak. Of course, he had to deal with the tragic Deepwater Horizon spill in the Gulf of Mexico.

But for the most part, he has done a tremendous job with the restructuring. He has drastically cut costs (down by $7 billion since 2014) and unloaded about $75 billion in assets (consider that BP is now a third smaller since the oil spill). What’s more, he has skillfully managed through the enormous liabilities and has put in place much stronger safety systems.

According to a recent interview on Bloomberg TV, Dudley noted: “It’s time for BP to start growing. We’ve walked through so many difficulties in the U.S. that I think the company now is well-positioned for growth.”

Portfolio: Despite all the divestitures, BP still has a strong set of assets. If anything, the restructuring has forced the company to focus on those segments of the business that have the most potential for long-term returns.

Consider that BP has reserves of 17.8 billion, which should last for nearly 15 years. A key part of this has been Dudley’s strong negotiations with Russia’s Rosneft.

But there are other important initiatives, such as in Egypt, Abu Dhabi and various parts of Africa. BP is even investing in the Gulf of Mexico as seen with the “Mad Dog 2” project, which promises to be a low-cost source of energy.

Valuation and Dividend: BP stock is selling at a reasonable valuation. Keep in mind that the forward price-to-earnings multiple is 12.3X. By comparison, XOM trades at 16.6X and CVX sports a multiple of 18X.

And yes, the dividend on BP is standout, with the yield at 7.2%. Hey, it is only 3.7% for XOM and 4% for CVX.

3 Cons on BP Stock

Financials: It’s true that BP continues to pump out strong operating cash flows, which came to $10.7 billion last year. Although, when you add the heavy capital costs — which were $16.7 billion in 2016 — the company is in the red. To deal with this, BP has had to borrow large amount, with the debt reaching about $60 billion. There have also been ongoing divestitures.

However, if the oil prices drop again, this will certainly put the pressure on the company. In fact, one the possibilities could eventually be a reduction of the dividend.

Competition: With the heavy debt load and limited cash flows, BP is not in an ideal position. The fact is that its rivals have the scale and resources to be more aggressive with bids for new projects.

Besides, even with existing projects, BP really does not have the ability to take major investments. Instead, there really needs to a continued focus on costs. And while this may help reduce the risks, it will also likely mean that the returns will be muted too.

Oil Prices: They are often volatile, which makes it tough for large companies to manage their operations. Let’s face it, there are many factors that can have a major impact, whether geopolitical problems in the Middle East, new technologies (as has been the case with unconventional drilling through fracking) and the moves of the Organization of the Petroleum Exporting Countries. Oh, and of course, a global recession can mean a steep drop, as consumer demand trails off.

History has also seen prolonged periods of low prices. This was the case for the 1980s and 1990s.

However, as for BP, the company could be particularly vulnerable. The cash-balance break-even point on its production is about $60 (this was up from the prior estimate of $50 to $55). True, the company plans to take this down to $40. But if there is instability in the meantime, it could mean a hit to the bottom line.

Bottom Line on BP Stock

Again, Dudley has done a tremendous job with BP stock. The company now is much more streamlined and has better systems in place.

And according to BP’s most recent report, the five-year plan does look encouraging. The projection is for free cash flows to hit $13 billion to $14 billion. Actually, this assumes that oil prices do not rise from current levels.

In other words, if the projection pans out, BP stock should benefit nicely, especially since the valuation is already relatively low.

Tom Taulli runs the InvestorPlace blog IPO Playbook and is the author of various books, including Taxes 2017: Saving A Bundle. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.