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Imperial Oil (IMO) Up 50.1% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Imperial Oil (IMO - Free Report) . Shares have added about 50.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Imperial Oil due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Imperial Oil Posts Breakeven Earnings in Q3
Imperial Oil reported break-even earnings. The Zacks Consensus Estimate was of a loss of 9 cents per share. This better-than-expected result was primarily driven by reduced production and manufacturing expenses. However, the Canadian integrated oil and gas player delivered a profit of 42 cents in the year-ago quarter. The year-over-year decline was due to lower upstream net production as well as refinery throughput in the downstream unit.
In the third quarter, revenues of $4.47 billion came ahead of the Zacks Consensus Estimate of $3.42 billion. However, the top line fell from the year-ago quarter’s sales of $6.62 billion.
Segmental Information
Upstream: Revenues of C$2,303 million decreased from the prior-year level of C$3,105 million. The segment incurred a net loss of C$74 million against net income of C$209 million in the year-ago quarter. This downside was due to lower commodity price realizations and weak volumes in the upstream.
Net production volumes during the quarter under review averaged 352,000 barrels of oil equivalent per day (Boe/d), down from 360,000 Boe/d in the year-ago quarter. Total oil and NGL output amounted to 341,000 barrels per day (BPD) compared with 385,000 BPD in third-quarter 2019. Net oil and NGL output from Kearl and Cold Lake totaled 134,000 bpd and 131,000 bpd, respectively. Syncrude output averaged 67,000 BPD, down 3% from the year-earlier quarter. Net natural gas production came in at 145 million cubic feet per day (Mcf/d), higher than 131 Mcf/d in the comparable quarter last year.
Bitumen price realizations totaled C$35.95 a barrel, down from C$51.12 in the year-ago quarter. The company received an average realized price of C$50.79 per barrel of synthetic oil compared with the year-ago quarter’s C$77.27. For conventional crude oil, it received C$29.45 per barrel compared with the year-ago quarter’s C$53.90. Prices of NGL and gas increased year over year to C$18.91 a barrel and C$1.79 per thousand cubic feet, respectively.
Downstream: Revenues of C$4,406 million were down from $6,612 million in third-quarter 2019. Moreover, the segment incurred a net income of C$77 million compared with C$221 million in the year-ago quarter, attributable toweak margins of about $230 million and soft sales volumes of around $70 million.
Refinery throughput in the third quarter averaged 341,000 BPD, lower than the prior-year quarter’s level of 363,000 BPD. Capacity utilization of 81% compared unfavorably with the year-earlier level of 86%. This result was on account of muted demand resulting from coronavirus.
Chemical: Revenues of C$268 million fell from C$298 million in third-quarter 2019. Net income was recorded at C$27 million compared with the year-ago quarter’s C$38 million.
Total Costs & Capex
Total expenses of C$5,952 million declined from the year-ago quarter’s C$8,182 million. In the quarter under consideration, the company’s capital and exploration expenditures summed C$141 million, down from the year-ago quarter’s C$442 million. Of the total expenditure, 55.3% was allotted to the upstream segment.
Financial Performance
Imperial Oil’s cash flow from operating activities was C$875 million in the reported quarter. However, in the year-ago period, cash flow from operating activities came in at C$1,376 million.
Importantly, the company returned C$162 million to its shareholders through dividends in the reported quarter. It paid out 22 Canadian cents as dividend per share matched the year-ago figure.
As of Sep 30, the company held C$817 million in cash and cash equivalents. Its total debt amounted to C$5,189 million, representing a total debt to total capital of 18.5%.
Outlook
Responding to the coronavirus-induced sudden oil price slump, Imperial Oil is taking steps to rationalize its planned activities and capital spending for the current year. Amid the growing crisis,the company announced sizeable cuts in 2020 capital and streamlined its operating spending plans. Capital and exploration expenditures for the ongoing year are now projected to be $900 million, down from the prior guided range of $1.1-$1.2 billion. Also, the company’s year-to-date production and manufacturing expenses declined $813 million from the prior-year level, thereby enabling the company to already exceed its full-year cost-reduction target of $500 million. Imperial Oil reiterates its 2020 guidance for gross output from Kearl at 220,000 barrels per day.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month. The consensus estimate has shifted 166.67% due to these changes.
VGM Scores
At this time, Imperial Oil has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Imperial Oil has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Imperial Oil (IMO) Up 50.1% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Imperial Oil (IMO - Free Report) . Shares have added about 50.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Imperial Oil due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Imperial Oil Posts Breakeven Earnings in Q3
Imperial Oil reported break-even earnings. The Zacks Consensus Estimate was of a loss of 9 cents per share. This better-than-expected result was primarily driven by reduced production and manufacturing expenses. However, the Canadian integrated oil and gas player delivered a profit of 42 cents in the year-ago quarter. The year-over-year decline was due to lower upstream net production as well as refinery throughput in the downstream unit.
In the third quarter, revenues of $4.47 billion came ahead of the Zacks Consensus Estimate of $3.42 billion. However, the top line fell from the year-ago quarter’s sales of $6.62 billion.
Segmental Information
Upstream: Revenues of C$2,303 million decreased from the prior-year level of C$3,105 million. The segment incurred a net loss of C$74 million against net income of C$209 million in the year-ago quarter. This downside was due to lower commodity price realizations and weak volumes in the upstream.
Net production volumes during the quarter under review averaged 352,000 barrels of oil equivalent per day (Boe/d), down from 360,000 Boe/d in the year-ago quarter. Total oil and NGL output amounted to 341,000 barrels per day (BPD) compared with 385,000 BPD in third-quarter 2019. Net oil and NGL output from Kearl and Cold Lake totaled 134,000 bpd and 131,000 bpd, respectively. Syncrude output averaged 67,000 BPD, down 3% from the year-earlier quarter. Net natural gas production came in at 145 million cubic feet per day (Mcf/d), higher than 131 Mcf/d in the comparable quarter last year.
Bitumen price realizations totaled C$35.95 a barrel, down from C$51.12 in the year-ago quarter. The company received an average realized price of C$50.79 per barrel of synthetic oil compared with the year-ago quarter’s C$77.27. For conventional crude oil, it received C$29.45 per barrel compared with the year-ago quarter’s C$53.90. Prices of NGL and gas increased year over year to C$18.91 a barrel and C$1.79 per thousand cubic feet, respectively.
Downstream: Revenues of C$4,406 million were down from $6,612 million in third-quarter 2019. Moreover, the segment incurred a net income of C$77 million compared with C$221 million in the year-ago quarter, attributable toweak margins of about $230 million and soft sales volumes of around $70 million.
Refinery throughput in the third quarter averaged 341,000 BPD, lower than the prior-year quarter’s level of 363,000 BPD. Capacity utilization of 81% compared unfavorably with the year-earlier level of 86%. This result was on account of muted demand resulting from coronavirus.
Chemical: Revenues of C$268 million fell from C$298 million in third-quarter 2019. Net income was recorded at C$27 million compared with the year-ago quarter’s C$38 million.
Total Costs & Capex
Total expenses of C$5,952 million declined from the year-ago quarter’s C$8,182 million. In the quarter under consideration, the company’s capital and exploration expenditures summed C$141 million, down from the year-ago quarter’s C$442 million. Of the total expenditure, 55.3% was allotted to the upstream segment.
Financial Performance
Imperial Oil’s cash flow from operating activities was C$875 million in the reported quarter. However, in the year-ago period, cash flow from operating activities came in at C$1,376 million.
Importantly, the company returned C$162 million to its shareholders through dividends in the reported quarter. It paid out 22 Canadian cents as dividend per share matched the year-ago figure.
As of Sep 30, the company held C$817 million in cash and cash equivalents. Its total debt amounted to C$5,189 million, representing a total debt to total capital of 18.5%.
Outlook
Responding to the coronavirus-induced sudden oil price slump, Imperial Oil is taking steps to rationalize its planned activities and capital spending for the current year. Amid the growing crisis,the company announced sizeable cuts in 2020 capital and streamlined its operating spending plans. Capital and exploration expenditures for the ongoing year are now projected to be $900 million, down from the prior guided range of $1.1-$1.2 billion. Also, the company’s year-to-date production and manufacturing expenses declined $813 million from the prior-year level, thereby enabling the company to already exceed its full-year cost-reduction target of $500 million. Imperial Oil reiterates its 2020 guidance for gross output from Kearl at 220,000 barrels per day.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month. The consensus estimate has shifted 166.67% due to these changes.
VGM Scores
At this time, Imperial Oil has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Imperial Oil has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.