It was an unexpected bit of turnaround for energy company Imperial Oil (TSE:IMO), as its shares slid nearly 4% in Friday morning’s trading despite pulling off a pretty impressive coup in its earnings report. Indeed, a hefty win in net income just couldn’t convince shareholders to stick around.
And it was an impressive win. Reports noted that Imperial Oil pulled in $1.13 billion in its second-quarter earnings. That by itself would be amazing, but it’s even better when you consider that it brought in $675 million just a year ago. Earnings per share weren’t much different; it brought in $1.15 per share in the second quarter of 2023, but that number swelled to $2.11 per share in the most recent quarter.
Even total revenue was on the rise, going from $11.82 billion in 2023’s second quarter to $13.38 billion in the second quarter of this year. Production was up, on average, rising to 404,000 barrels per day from 363,000 this time last year. However, refining was down a bit, dropping to 387,000 barrels per day against the 388,000 per day seen a year prior.
Dividend and AvGas
Imperial Oil also went on to declare a dividend payment of $0.60 per share. Shareholders who have Imperial Oil stock by the record date of September 4 will get in on the payment that is to be paid on October 1. The company has paid dividends for over 100 years, which suggests a good degree of stability.
In addition, the company managed to overcome a problem related to its production of 100LL AvGas, which is a type of aviation fuel. There had been some quality control issues that caused Imperial Oil to close its refinery for weeks. This led to an aviation fuel shortage since the refinery is Canada’s main producer of 100LL AvGas.
Nevertheless, the Imperial Oil facility in Alberta has avgas again. Supplies are limited, reports note, as they’re working on rebuilding stocks, but good news is good news, especially for small regional operators who had a tough time coming by the stuff for a while. That also means a restored revenue stream for Imperial.
Is Imperial Oil a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on TSE:IMO stock based on three Buys and three Holds assigned in the past three months, as indicated by the graphic below. After a 35.41% rally in its share price over the past year, the average TSE:IMO price target of C$106.60 per share implies 14.36% upside potential.
