Imperial Oil Limited (NYSEAMERICAN: IMO) is set to release second-quarter results on Jul 29. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of $2.14 per share on revenues of $16.7 billion.
Let's delve into the factors that might have influenced the integrated energy company's performance in the June quarter. But it's worth taking a look at IMO's previous-quarter performance first.
Highlights of Q1 Earnings & Surprise History
In the last-reported quarter, the Calgary, Canada-based petroleum operator beat the consensus mark on strengthening commodity price realizations. Imperial Oil had reported adjusted earnings per share of $1.38, ahead of the Zacks Consensus Estimate of $1.35. Revenues of $10 billion also outperformed the Zacks Consensus Estimate by 10.6%.
IMO beat the Zacks Consensus Estimate for earnings twice in the last four quarters and missed in the other two, resulting in a negative earnings surprise of 2.5%, on average. This is depicted in the graph below:
Imperial Oil Limited Price and EPS Surprise
Imperial Oil Limited price-eps-surprise | Imperial Oil Limited Quote
Trend in Estimate Revision
The Zacks Consensus Estimate for the second-quarter bottom line has been revised 7% downward in the past seven days. The estimated figure indicates a 422% surge year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 155.2% increase from the year-ago period.
Factors to Consider
Imperial is expected to have benefited from the surge in hydrocarbon realizations. In the first quarter of 2022, the company's bitumen price realizations averaged C$89.36 a barrel, up from C$47.19 in the year-ago quarter. Further, IMO received an average realized price of C$117.24 per barrel of synthetic oil compared with the year-ago quarter's C$67.41. For conventional crude oil, it received C$98.38 per barrel, while a year ago, the company got C$49.54. Prices of NGL increased to C$59.27 a barrel, while the same of gas rose to C$5.08 per thousand cubic feet year over year. The uptick is most likely to have continued in the to-be-reported quarter, thanks to the sharp rise in commodity prices following geopolitical tensions, strained supply and robust demand. This price boost is likely to have buoyed the second-quarter revenues and cash flows of Imperial Oil.
IMO is also expected to have reaped the reward of a better macro environment in its downstream (or refining) unit. In the previous quarter, segment revenues of C$14,045 million were up significantly from C$5,305 million in the first quarter of 2021. Moreover, the segment earned a net income of C$389 million compared with C$292 million reported in the year-ago quarter. The positive movement is expected to have continued in the to-be-reported quarter, with post-pandemic demand recovery driving margins higher.
Why a Likely Positive Surprise?
Our proven model predicts an earnings beat for Imperial Oil this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
IMO has an Earnings ESP of +2.41% and a Zacks Rank #2.
Other Stocks to Consider
Imperial Oil is not the only energy company looking up this earnings cycle. Here are some other firms from the space that you may want to consider on the basis of our model:
Valero Energy Corporation (NYSE:VLO) has an Earnings ESP of +10.22% and a Zacks Rank #1. The firm is scheduled to release earnings on Jul 28.
For 2022, VLO has a projected earnings growth rate of 644.5%. Valued at around $42.5 billion, Valero Energy has gained around 66.9% in a year.
Chevron Corporation (NYSE:CVX) has an Earnings ESP of +1.69% and a Zacks Rank #2. The firm is scheduled to release earnings on Jul 29.
CVX is valued at around $283.3 billion. The Zacks Consensus Estimate for the company's 2022 earnings has been revised 6.7% upward over the past 60 days. Chevron has surged around 47.1% in a year.
ExxonMobil (NYSE:XOM) has an Earnings ESP of +5.89% and a Zacks Rank #2. The firm is scheduled to release earnings on Jul 29.
XOM topped the Zacks Consensus Estimate by an average of 1.3% in the trailing four quarters, though it experienced an 8% miss in Q1. ExxonMobil has gained some 53.9% in a year.
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