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Imperial Oil to Report Q3 Earnings: What's in Store for the Stock?

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Imperial Oil Limited (IMO - Free Report) is set to release third-quarter results on Nov. 1, 2024. The current Zacks Consensus Estimate for earnings is pegged at $1.48 per share and that for revenues is pinned at $11.29 billion.

Let us delve into the factors that are likely to have influenced the integrated oil and gas service provider’s performance in the to-be-reported quarter. But first, it is worth taking a look at Imperial’s performance in the last reported quarter.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
 

Highlights of IMO’s Q2 Earnings

In the last reported quarter, the Calgary-based company, one of Canada’s largest integrated oil producers, surpassed the consensus mark thanks to increased contributions from its Upstream segment, driven by improved bitumen prices and stronger margins. IMO reported adjusted earnings per share of $1.54, surpassing the Zacks Consensus Estimate of $1.43. However, revenues of $9.8 billion missed the Zacks Consensus Estimate of $10.5 billion.

IMO beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, with an average surprise of 11.18%.

This is depicted in the graph below:

Imperial Oil Limited Price and EPS Surprise

Imperial Oil Limited Price and EPS Surprise

Imperial Oil Limited price-eps-surprise | Imperial Oil Limited Quote
 

IMO’s Trend in Estimate Revision

The Zacks Consensus Estimate for third-quarter fiscal 2024 earnings has witnessed an upward revision and a downward movement in the past 30 days. The estimated figure indicates a 28.16% year-over-year decrease. The Zacks Consensus Estimate for revenues indicates an 8.80% increase from the year-ago period.
 

Factors to Consider for IMO’s Q3 Performance

IMO’s revenues are expected to have deteriorated in the quarter to be reported.  The company primarily generates revenues through its integrated oil and gas operations in Canada. IMO’s key revenue streams include exploration and production of crude oil and natural gas, refining crude oil into various petroleum products, marketing and distribution of these products through retail and commercial channels and sales of lubricants and specialty chemicals.

Our model predicts third-quarter revenues to have decreased to $9746.3 million from last quarter’s $9781.0 million. IMO’s Upstream segment is projected to have generated C$4873.3 million, up from C$4552 million in the previous quarter. In contrast, the Downstream segment is expected to have reached C$14464.6 million, down from C$14634 million in the last quarter. The Chemical segment is anticipated to have generated C$365 million, a decrease from C$418 million in the previous quarter.

On a positive note, the reduction in IMO's expenses is expected to have positively influenced its bottom-line performance. The company’s total expenses are projected to have been C$11817.2 million in the third quarter, reflecting a 0.6% decrease from the last quarter’s C$11894 million. The cost of production and manufacturing is estimated at C$1521.9 million, down from C$1689 million in the previous quarter. However, the cost of federal excise tax and fuel charge is expected to have reached to C$632.7 million compared with C$656 million in the last quarter.
 

What Does Our Model Predict for IMO?

The proven Zacks model does not conclusively predict an earnings beat for Imperial this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that is not the case here.

IMO’s Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company is +1.46%.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank of IMO:  IMO currently carries a Zacks Rank #4 (Sell).
 

Stocks to Consider

Here are some firms from the energy space that you may want to consider, as these have the right combination of elements to post an earnings beat this season.

Cheniere Energy, Inc. (LNG - Free Report) has an Earnings ESP of +12.21% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The firm is scheduled to release earnings on Oct. 31. LNG’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed the other two, delivering an average surprise of 55.86%. Valued at around $41.84 billion, LNG has gained 10% in a year.

Helmerich & Payne (HP - Free Report) has an Earnings ESP of +1.89% and a Zacks Rank #2 at present. The firm is scheduled to release earnings on Nov. 13.

HP’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed the remaining one, delivering an average surprise of 14.79%. HP is engaged in the contract drilling of oil and gas wells in the United States and internationally.

TC Energy Corporation (TRP - Free Report) has an Earnings ESP of +3.1% and a Zacks Rank #3 at present. The firm is scheduled to release earnings on Nov. 7. Valued at around $49.05 billion, TRP has gained 36.6% in a year.

The company is primarily focused on natural gas transmission through its 57,500-mile network of pipelines located in Canada, the United States and Mexico. TC Energy is also involved in other businesses, including power generation, natural gas storage and crude oil pipelines.

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