This IMO Stock Forecast article was written by Opher Joseph – Financial Analyst, I Know First.

Highlights

• The company is expected to generate promising double-digit growth in 2022.
• The consensus earnings per share have been revised from $ 4.84 to $5.92 in the past 60 days, while there have been no downward revisions.
• The share buy-back ratio of the company is 4.7%, which is better than 97.06% of the companies in the industry.
• The Cash to Debt ratio of the company is 0.4% and the Debt to Equity ratio is 0.25% which indicates a strong financial position of the company’s operating cash-flows.

Overview

Imperial Oil Ltd. engages in the provision of the integrated oil business. It operates through the following business segments: Upstream, Downstream, Chemical, and Corporate and Others. The Upstream segment includes the exploration and production of crude oil, natural gas, synthetic oil, and bitumen. The Downstream segment focuses on refining crude oil into petroleum products. The Chemical segment manufactures and markets hydrocarbon-based chemicals and chemical products. The Corporate and Other segment covers assets and liabilities that do not specifically relate to business segments. The company was founded on September 8, 1880, and is headquartered in Calgary, Canada.

The Base for Growth in the Face of Macroeconomic Instability

The Russian invasion in Ukraine and further sanctions against Russia have been increasing uncertainty in the Oil & Gas market. According to YahooFinance, the Brent Crude Oil Last Day Financ (BZ=F) reached its intraday peak of $137 on March 7, 2022, but the current price on April 26th, 2022 is $104.99. For the purpose of decreasing the oil price, the U.S. and its allies in the International Energy Agency plan to release 240 million barrels from emergency oil reserves over a six-month period, which may limit the impact of sanctions on Russian oil in the short run. However, an extension of the war and rapidly depleting reserves will probably be the key oil driver for the rest of the year.

The earnings report, which is expected to be released on April 29, 2022, might help the stock move higher. Zacks expects quarterly earnings of $1.35 per share in its upcoming report, which represents a year-over-year change of +221.4%. At the same time, YahooFinance analysts put the consensus EPS of $1.60 and put the target price at $55.49.

The company is expected to generate promising double-digit growth in 2022. The company has displayed strong fundamental growth by generating impressive cash from operations. On account of its performance, it has gained a strong market momentum and also received an upward price target and projected EPS in the upcoming quarterly results. The consensus earnings per share have been revised from $ 4.84 to $ 5.92 in the past 60 days, while there have been no downward revisions.

IMO shows a good financial performance across the Oil & Gas industry. According to GuruFocus, IMO has a profitable rank of 9/10. Moreover, IMO’s Net Margin and ROE are 6.97% and 11.6% that better than 61.58% and 67.24% of companies in the industry, respectively.

The company has maintained a steady pay-out of dividends over the years and the dividend yield is bound to improve with higher growth projections. The dividend growth rate is 12.2% which is higher than 77.86% of the companies in the industry. The company has been carrying out share buy-back schemes to further boost shareholder returns. The share buy-back ratio of the company is 4.7%, which is better than 97.06% of the companies in the industry. These dividend payouts and share buybacks are well covered by the cash flows generated by the company. The Cash to Debt ratio of the company is 0.4% and the Debt to Equity ratio is 0.25% which indicates a strong financial position of the company’s operating cash-flows.

IMO also looks attractive in terms of Piotroski F-Score and Altman Z-Score. Piotroski F-score is a number between 0 and 9 that is used to assess the soundness of a company’s financial position. A score of 8 may indicate that the company’s stock is undervalued and can be interpreted by investors as a good signal to buy the stock. The Altman Z-score, which determines the result of a credit test, stays on the border of the Grey and the Safe zones.

Conclusion

With the current prevailing uncertain macro-economic factors, there has been a worldwide inflationary pressure on crude oil prices. It is uncertain how long this situation takes to correct itself to restore normal prices. During this period, IMO stock is expected to experience some turbulent market sentiment due to volatile market prices. However, the company promises a steady growth at current valuations and I expect an upward trend of about 15% from current valuations, rising up to the $54 mark.

It is worth paying attention that the stock-picking AI of I Know First has a high signal on the one-year market trend forecasts, supporting my position for the IMO stock forecast. The light green for the short-term forecasts is mildly bullish, while the darker green is a strong bullish signal for the one-year forecast.

Past Success With IMO Stock Forecast

I Know First has been bullish on the IMO stock forecast in the past. On November 12^th, 2021 the I Know First algorithm issued a forecast for IMO stock price and recommended IMO as one of the best energy stocks to buy. The AI-driven IMO stock prediction was successful on a 3-months time horizon resulting in more than 32.56%.

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Please note-for trading decisions use the most recent forecast.