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What's in the Offing for Imperial Oil (IMO) Q4 Earnings?

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Imperial Oil Limited (IMO - Free Report) is set to release fourth-quarter 2019 results on Friday Jan 31, before the opening bell. The current Zacks Consensus Estimate for the to-be-reported quarter is pegged at earnings of 30 cents per share on expected revenues of $6.67 billion. The bottom line has been revised 3.45% upward in the past seven days.

Let’s delve into the factors that might have impacted the company’s performance in the December quarter.

Factors to Impact Q4 Results

Robust operational performance at Imperial Oil’s US key projects is likely to have contributed to its fourth-quarter performance. Net production volumes during the third quarter averaged 360,000 barrels of oil equivalent per day (Boe/d), up from 353,000 Boe/d in the year-ago period, a trend most likely continued in the fourth quarter on the back of strong execution of ramped-up activities in Kearl, Cold Lake and Syncrude. 

However, pipeline construction in Canada failed to keep pace with the rising domestic oil production. This, in turn, forced producers like Imperial Oil to sell their products at a discounted rate. This downside might have hampered the top line.

For 2019, the company is likely to have incurred total capital expenditure in the C$1.8-C$1.9 billion range, higher than the year-ago quarter’s C$1.42 billion.

While significant output growth is expected to have boosted Imperial Oil’s fourth-quarter earnings, weak oil realizations in Canada and higher year-over-year spending might have affected the company’s overall results.

What Does Our Model Say?

The proven Zacks model does not conclusively predict an earnings beat for Imperial Oil 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 beating estimates. But that’s not the case here.

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

Earnings ESP: Imperial Oil has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 30 cents each.

Zacks Rank: Imperial Oil carries a Zacks Rank #2, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult for the stock this earnings season.

Highlights of Q3 Earnings & Surprise History

In the last reported quarter, Imperial Oil missed on both earnings and revenues. Earnings per share of 42 cents lagged the Zacks Consensus Estimate of 44 cents due to weaker contribution from the company’s upstream and downstream segments. This Canadian integrated oil and gas player’s bottom line also plunged from the year-ago figure of 75 cents.

Moreover, third-quarter revenues of $6.62 billion fell short of the Zacks Estimate of $6.7 billion. Also, the top line decreased from the year-ago figure of $7.4 billion.

As far as earnings surprises are concerned, this Calgary-based company’s bottom line missed the Zacks Consensus Estimate in two of the trailing four quarters, the average negative surprise being 0.69%. 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

Stocks to Consider

Here are some stocks worth considering from the energy space, which per our model have the right combination of elements to beat on earnings this reporting cycle:

NuStar Energy L.P. (NS - Free Report) has an Earnings ESP of +1.32% and a Zacks Rank of 2. The company is slated to report fourth-quarter earnings on Feb 5.

Chevron Corporation (CVX - Free Report) has an Earnings ESP of +1.17% and is Zacks #2 Ranked. The company is slated to announce fourth-quarter 2019 earnings on Jan 31.

Magellan Midstream Partners (MMP - Free Report) has an Earnings ESP of +3.81% and a Zacks Rank #3. The partnership is slated to release fourth-quarter earnings on Jan 30. You can see the complete list of today’s Zacks #1 Rank stocks here.

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